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Short Campaigns by Hedge Funds

Author

Listed:
  • Ian Appel
  • Vyacheslav Fos

Abstract

The number of short campaigns by hedge funds has dramatically increased over the last two decades. Nearly 80% of campaigns are undertaken by activist hedge funds, particularly those that employ hostile tactics in their long campaigns. Short campaigns are associated with negative abnormal returns of –7%, with aggregate valuation effects similar in magnitude to the gains from long activism campaigns. In contrast to long campaigns, public communication is a critical component of short campaigns. We do not find evidence that such communication is manipulative. Overall, our analysis highlights the importance of short campaigns for understanding the economic impact of activist hedge funds.

Suggested Citation

  • Ian Appel & Vyacheslav Fos, 2024. "Short Campaigns by Hedge Funds," The Review of Financial Studies, Society for Financial Studies, vol. 37(5), pages 1460-1493.
    • Handle: RePEc:oup:rfinst:v:37:y:2024:i:5:p:1460-1493.
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    File URL: http://hdl.handle.net/10.1093/rfs/hhad092
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    More about this item

    Keywords

    G23; G14; G30;
    All these keywords.

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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