Controversial Minority Shareholder: An Empirical Analysis

48 Pages Posted: 26 Jan 2004

See all articles by Ettore Croci

Ettore Croci

Catholic University of the Sacred Heart of Milan

Date Written: September 2005

Abstract

I analyze 136 large minority block purchases made by a group of controversial investors in Europe during 1990-2001. Contrary to the hypothesis that wants these investors expropriate the target companies, there is a positive market reaction to the first public announcement of these purchases. In the long-run, controversial investors earn an abnormal profit when they sell their stakes. When they still hold their positions at the end of the sample period (31 December 2001), abnormal returns are insignificant. Neither is there evidence that their activities improve operating performance, since ROA does not improve after the acquisitions. The findings are consistent with a superior stock picking ability of these investors, but they are not consistent with the hypothesis that these investors are governance champions.

Keywords: Corporate raiders, corporate control, event study, controversial minority investors

JEL Classification: G34

Suggested Citation

Croci, Ettore, Controversial Minority Shareholder: An Empirical Analysis (September 2005). Available at SSRN: https://ssrn.com/abstract=489505 or http://dx.doi.org/10.2139/ssrn.489505

Ettore Croci (Contact Author)

Catholic University of the Sacred Heart of Milan ( email )

Largo Gemelli, 1
Via Necchi 9
Milan, MI 20123
Italy

Register to save articles to
your library

Register

Paper statistics

Downloads
211
Abstract Views
1,454
rank
148,862
PlumX Metrics