Does Hedge Fund Managers’ Industry Experience Matter for Hedge Fund Activism?

61 Pages Posted: 25 Jun 2019

See all articles by Ivan E. Brick

Ivan E. Brick

affiliation not provided to SSRN

Yuzi Chen

Nanyang Technological University (NTU), Nanyang Business School

Jun-Koo Kang

Nanyang Technological University (NTU) - Nanyang Business School

Jin-Mo Kim

Rutgers, The State University of New Jersey - Rutgers Business School at Newark & New Brunswick

Date Written: June 15, 2019

Abstract

We study whether managers’ industry experience matters for hedge fund activism. We find that hedge fund managers with previous executive and outside director experience in target industries hold target shares longer and are more likely to serve as directors on target boards than those without such experience. Moreover, the targets of hedge funds whose managers have industry experience realize higher acquisition announcement returns and better operating performance, and show increases in payouts and reductions in CEO compensation and investment after acquisitions. The results suggest that managers’ industry expertise is an important source of value creation in hedge fund activism.

Keywords: hedge fund activism, hedge fund manager, industry experience, acquisition, target, announcement return, target policy

JEL Classification: G14, G23, G30, G34

Suggested Citation

Brick, Ivan E. and Chen, Yuzi and Kang, Jun-Koo and Kim, Jin-Mo, Does Hedge Fund Managers’ Industry Experience Matter for Hedge Fund Activism? (June 15, 2019). Available at SSRN: https://ssrn.com/abstract=3407718 or http://dx.doi.org/10.2139/ssrn.3407718

Ivan E. Brick

affiliation not provided to SSRN

Yuzi Chen (Contact Author)

Nanyang Technological University (NTU), Nanyang Business School ( email )

Nanyang Business School, NTU, 50 Nanyang Avenue
Research & PhD Office, Blk S3-01B-73
Singapore, 639798
Singapore
90557939 (Phone)

Jun-Koo Kang

Nanyang Technological University (NTU) - Nanyang Business School ( email )

Nanyang Avenue, Block S3-01b-54
Singapore, 639798
Singapore
(+65) 6790-5662 (Phone)
(+65) 6791-3697 (Fax)

HOME PAGE: http://www.nbs.ntu.edu.sg/nbs_corporate/divisions/bnf/index.asp

Jin-Mo Kim

Rutgers, The State University of New Jersey - Rutgers Business School at Newark & New Brunswick ( email )

Janice H. Levin Bldg., Room 121
94 Rockafeller Road
Piscataway, NJ 08854-8054
United States

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