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Shareholder activism around the globe: Hedge funds vs. other professional investors

Author

Listed:
  • Jochen Hartmann

    (University of Paderborn)

  • Matthias Pelster

    (University of Paderborn)

  • Soenke Sievers

    (University of Paderborn)

Abstract

Shareholder activism has sharply increased over the past decade and spread both across countries and among different types of investors. Today, 50% of all engagements occur outside North America, with non-hedge fund investors accounting for one-third of all engagements. We investigate the effects and characteristics of hedge fund and non-hedge fund activism using an international dataset of 2,689 activist engagements across 44 countries between 2008 and 2019. Activist investments in North America, on average, yield the largest immediate positive stock market returns and buy-and-hold returns, followed by engagements in Europe and the Asia-Pacific region. In North America, short-term abnormal returns for hedge funds are at a similar level as those for non-hedge funds, but in Europe and the Asia-Pacific region, they are higher for non-hedge funds. However, globally, hedge funds achieve higher buy-and hold returns and are more successful than non-hedge funds in implementing change in target firms. Over time, our results suggest unfulfilled investor expectations, as announcement returns are increasing but (abnormal) buy-and-hold returns and the impact on performance measures of target firms are decreasing for both hedge funds and non-hedge funds.

Suggested Citation

  • Jochen Hartmann & Matthias Pelster & Soenke Sievers, 2022. "Shareholder activism around the globe: Hedge funds vs. other professional investors," Working Papers Dissertations 98, Paderborn University, Faculty of Business Administration and Economics.
  • Handle: RePEc:pdn:dispap:98
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    References listed on IDEAS

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    More about this item

    Keywords

    Shareholder activism; international evidence; hedge funds; non-hedge fund activism; 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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