Institutional Investors and Hedge Fund Activism

65 Pages Posted: 20 Apr 2020

See all articles by Simi Kedia

Simi Kedia

Rutgers Business School

Laura T. Starks

University of Texas at Austin - Department of Finance

Xianjue Wang

Southwestern University of Finance and Economics (SWUFE); Rutgers, The State University of New Jersey - Rutgers Business School at Newark & New Brunswick

Date Written: March 24, 2020

Abstract

Hedge fund activists have ambiguous relationships with the institutional shareholders in their target firms. While some support their activities, others counter their actions. Due to their relatively small holdings in target firms, the activists typically need the cooperation of other institutional shareholders that are willing to influence the activist’s campaign success. We find the presence of “activism-friendly” institutions as owners is associated with an increased probability of being a target, higher long-term stock returns, and higher operating performance. Overall, we provide evidence suggesting the composition of a firm’s ownership has significant effects on hedge fund activists’ decisions and outcomes.

Suggested Citation

Kedia, Simi and Starks, Laura T. and Wang, Xianjue, Institutional Investors and Hedge Fund Activism (March 24, 2020). Available at SSRN: https://ssrn.com/abstract=3560537 or http://dx.doi.org/10.2139/ssrn.3560537

Simi Kedia (Contact Author)

Rutgers Business School ( email )

117 Levin
94 Rockafellar Road
Piscataway, NJ
United States
8484454195 (Phone)

Laura T. Starks

University of Texas at Austin - Department of Finance ( email )

Red McCombs School of Business
Austin, TX 78712
United States
512-471-5899 (Phone)
512-471-5073 (Fax)

Xianjue Wang

Southwestern University of Finance and Economics (SWUFE) ( email )

55 Guanghuacun St,
Chengdu, Sichuan 610074
China
+86 13228162478 (Phone)

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

1 Washington Park
Newark, NJ 07102
United States
9082104347 (Phone)

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
195
Abstract Views
1,013
rank
177,468
PlumX Metrics