The Role of the Media in Hedge Fund Activism

41 Pages Posted: 21 May 2020

See all articles by Xinjie Wang

Xinjie Wang

Southern University of Science and Technology

Ge Wu

University of Richmond

Date Written: April 24, 2020

Abstract

Using a large set of hedge fund 13D filing and news data for the period of 2000 to 2019, we document that firms with more negative media sentiment are more likely to be targeted by hedge funds. The media sentiment of target firms reverts to normal level after the 13D filing dates. Our analysis of media sentiment for different corporate events shows that event-specific media sentiment is associated with the specific objectives of activism campaigns. The firm’s fundamental information captured by media sentiment drives the hedge fund targeting event and such targeting generates higher long-term stock returns. Our findings suggest that negative public perception is a key factor driving activists' selection of targets.

Keywords: sentiment, media, hedge fund activism, governance

JEL Classification: G30, G34

Suggested Citation

Wang, Xinjie and Wu, Ge, The Role of the Media in Hedge Fund Activism (April 24, 2020). Available at SSRN: https://ssrn.com/abstract=3584071 or http://dx.doi.org/10.2139/ssrn.3584071

Xinjie Wang

Southern University of Science and Technology ( email )

1088 Xueyuan Blvd
Xili, Nanshan District
Shenzhen, Guangdong 518055
China

Ge Wu (Contact Author)

University of Richmond ( email )

102 UR Drive
Richmond, VA 23173
United States

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