Friends or Foes? Activist Hedge Funds and Other Institutional Investors

• Authors: Carrothers Andrew

Abstracts

EN

The aim of this paper is to contribute to the understanding of the relationship between activist hedge funds and other institutional investors. Hedge funds are more likely to target firms with high levels of institutional ownership and demonstrate a preference for short-term focused institutional investors. Hedge fund activism generates short run and long run abnormal returns without increasing stock return volatility. Regardless of the investment horizon, volatility is inversely related to prior period institutional ownership. The trading behavior of institutional owners with different investment horizons is consistent with hedge fund activism creating value. These findings hold regardless of whether investment horizon is based on portfolio churn rate or type of institution. Overall the results suggest a mutually beneficial relationship between activist hedge funds and other institutional investors.

Keywords

EN

hedge funds; shareholder activism; institutional investors; corporate governance

• Publisher: Uniwersytet Ekonomiczny w Poznaniu
• Journal: Economics and Business Review
• Year: 2017
• Volume: 3(17)
• Issue: 1

Dates

published

2017-03-30

Contributors

author

Carrothers Andrew

• University of Prince Edward Island, Charlottetown, PE, Canada C1A 4PS

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Identifiers

DOI

10.18559/ebr.2017.1.3