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Impact of public demands on the performance of hedge fund activist engagements

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  • Hartmann, Jochen

Abstract

Hedge fund activists raise public demands around engagement announcements for a quarter of their engagements. I analyze the short- and long-term effects of public demands on the performance of target firms using an international dataset of 1670 activist engagements across 35 countries between 2008 and 2019. For the global sample, I estimate significantly higher announcement returns for engagements with public demands than for those without public demands. At the regional level, differences in announcement returns between such engagements are significant only in North America, and not in Europe and the Asia-Pacific region. I find no evidence of a significant long-term outperformance of engagements with public demands in general and for engagements with successfully enforced public demands, compared to the remaining engagements for all regions. My findings indicate that activists have started to target firms with different characteristics than previously, which may help to explain the non-existent long-term outperformance of engagements with public demands.

Suggested Citation

  • Hartmann, Jochen, 2023. "Impact of public demands on the performance of hedge fund activist engagements," International Review of Financial Analysis, Elsevier, vol. 87(C).
    • Handle: RePEc:eee:finana:v:87:y:2023:i:c:s1057521923000790
    DOI: 10.1016/j.irfa.2023.102563
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    1. Jochen Hartmann & Matthias Pelster & Soenke Sievers, 2022. "Can the market identify prosperous activist engagements? Evidence from announcement and long-term buy-and-hold returns," Working Papers Dissertations 100, Paderborn University, Faculty of Business Administration and Economics.
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    More about this item

    Keywords

    Shareholder activism; International evidence; Hedge funds; Institutional investors;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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