Price changes around hedge fund trades: disentangling trading and disclosure effects

Croci, Ettore; Petrella, Giovanni

doi:10.1007/s10997-013-9267-4

Cited by 8 publications

(1 citation statement)

References 23 publications

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“…Institutional shareholder trades have been shown to contain private information (Scholes, ; Bushee and Goodman, ; Yan and Zhang, ; Gallagher et al ., ). The empirical evidence shows a significant price reaction to blockholders’ acquisition announcements in the US (Brav et al ., ; Clifford, ; Greenwood and Schor, ; Klein and Zur, ; Edmans et al ., ; Bebchuk et al ., ) and international markets (for Japan: Buchanan et al ., ; for Germany: Weber and Zimmermann, ; Mietzner and Schweizer, ; for Italy: Croci and Petrella, ; for the UK: Becht et al ., ; Global: Kim et al ., ; Becht et al ., ). However, these studies chiefly focus on hedge fund activists and the results may not be applicable to other types of blockholders or investors (Edmans and Holderness, ).…”

Section: Introductionmentioning

confidence: 99%

The value of ongoing venture capital investment to newly listed firms

Hsu

Owen

Suchard

2019

Accounting & Finance

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We examine whether the market values continuing venture capital (VC) investor involvement in firms post-IPO. Compared to the US, Australian VC investors exit their investments post-IPO by on-market sales rather than distribution of holdings to their investors. Lockup periods tend to be longer and ownership thresholds for reporting trades lower. We find that the market responds positively to buy transactions, negatively to sell transactions of VC investors and negatively to the resignation of VC directors. These results are consistent with VC investors in the firm having a positive influence and creating value from which the VCs and other shareholders benefit.

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Section: Introductionmentioning

confidence: 99%

The value of ongoing venture capital investment to newly listed firms

Hsu

Owen

Suchard

2019

Accounting & Finance

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Returns to Hedge Fund Activism: An International Study

Becht

Franks

Grant³

et al. 2017

The Review of Financial Studies

174

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This paper provides evidence on the incidence, characteristics, and performance of activist engagements across countries. We find that the incidence of activism is greatest with high institutional ownership, particularly for U.S. institutions. We use a sample of 1,740 activist engagements across 23 countries and find that almost one-quarter of engagements are by multi-activists engaging the same target. These engagements perform strikingly better than single activist engagements. Engagement outcomes, such as board changes and takeovers, vary across countries and significantly contribute to the returns to activism. Japan is an exception, with high initial expectations and low outcomes. (JEL G32)

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The Early Returns to International Hedge Fund Activism: 2000–2010

Becht

Franks

Grant³

et al. 2019

J Applied Corp Finance

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In this summary of their recent article in the Review of Financial Studies, the authors provide an overview of the methods and findings of the first comprehensive study of worldwide hedge fund activism—one that examined the effectiveness of some 1,740 separate “engagements” of public companies by 330 different hedge funds operating in 23 countries in Asia, Europe, and North America during the period 2000‐2010. The study reports, first of all, that the incidence of shareholder activism is greatest in companies and countries with high institutional ownership, particularly U.S. institutions. In virtually all countries, with the possible exception of Japan, large holdings by institutional investors increased the probability that companies would be targeted by activists. Nevertheless, in all countries (except for the United States), foreign institutions—especially U.S. funds investing in non‐U.S. companies—have played a more important role than domestic institutional investors in supporting activism. The authors also report that those engagements that succeeded in producing “outcomes” were accompanied by positive and significant abnormal stock returns, not only upon the announcement of the activist's block purchase, but throughout the entire holding period. “Outcomes” were identified as taking one of four forms: (1) increases in dividends or stock buybacks; (2) replacement of board members; (3) corporate restructurings such as sales or spinoffs of businesses; and (4) takeover (or sale) of the entire company. But if such outcomes were associated with high shareholder returns, in the many cases where there were no such outcomes, the eventual, holding‐period returns to shareholders, even after taking account of the initially positive market reaction to news of the engagement, were indistinguishable from zero. The authors found that activists succeeded in achieving at least one of their proposed outcomes in roughly one out of two (53%) of the 1,740 engagements. But this success rate varied considerably across countries, ranging from a high of 61% for North American companies, to 50% for European companies, but only 18% engagements of Asian companies—with Japan, again, a country of high disclosure returns but unfulfilled expectations and disappointing outcomes. Outcomes also tended to be strongly associated with the roughly 25% of the total engagements that involved two or more activists (referred to as “wolfpacks”) and produced very high returns.

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Price changes around hedge fund trades: disentangling trading and disclosure effects

Cited by 8 publications

References 23 publications

The value of ongoing venture capital investment to newly listed firms

The value of ongoing venture capital investment to newly listed firms

Returns to Hedge Fund Activism: An International Study

The Early Returns to International Hedge Fund Activism: 2000–2010

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