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

59 Pages Posted: 25 Jun 2019 Last revised: 15 Nov 2021

See all articles by Ivan E. Brick

Ivan E. Brick

affiliation not provided to SSRN

Yuzi Chen

School of Finance, Central University of Finance and Economics

Jun-Koo Kang

Nanyang Business School, Nanyang Technological University

Jin-Mo Kim

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

Date Written: November 14, 2021

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? (November 14, 2021). 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)

School of Finance, Central University of Finance and Economics ( email )

Shahe Higher Education Park
Changping District
China, Beijing 102206
China

Jun-Koo Kang

Nanyang Business School, Nanyang Technological University ( 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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