Journal ArticleDOI
The Impact of Hedge Fund Activism on the Target Firm's Existing Bondholders
April Klein,Emanuel Zur +1 more
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In contrast to previous studies documenting positive abnormal returns to target shareholders, this paper found that hedge fund activism significantly reduces bondholders' wealth, and also found an expropriation of wealth from the bondholder to the shareholders.Abstract:
In contrast to previous studies documenting positive abnormal returns to target shareholders, we find that hedge fund activism significantly reduces bondholders' wealth. The average excess bond return is - 3.9% around the initial 13D filing, and is an additional - 4.5% over the remaining year. Excess bond returns are related inversely to subsequent changes in cash and assets (loss of collateral effects) and directly to changes in total debt. Confrontational campaigns and the acquisition of at least one seat on the target's board elicit more negative bond returns. We also find an expropriation of wealth from the bondholder to the shareholder. The Author 2011. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For Permissions, please e-mail: journals.permissions@oup.com., Oxford University Press.read more
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Journal ArticleDOI
The Effect of Liquidity on Governance
TL;DR: In this paper, the authors demonstrate a positive effect of stock liquidity on blockholder governance, showing that stock liquidity increases the likelihood of block formation and has an unconditional positive effect on voice as well as exit.
Journal ArticleDOI
Shareholder Activism A Multidisciplinary Review
TL;DR: The heterogeneity of factors in shareholder activism, such as the firm, activist, and environmental characteristics that promote or inhibit activism, along with the breadth of activism's issues, methods, and processes, provide a plethora of theoretical and methodological opportunities and challenges for activism researchers as mentioned in this paper.
Journal ArticleDOI
Momentum in Corporate Bond Returns
TL;DR: In this article, the authors document significant momentum in a comprehensive sample of 81,491 US corporate bonds with both transaction and dealer-quote data from 1973 to 2011, showing that momentum is driven by non-investment grade (NIG) bonds.
Book ChapterDOI
Blockholders: A Survey of Theory and Evidence
TL;DR: A review of the theoretical and empirical literature on the role of blockholders in corporate governance can be found in this paper, where a simple unifying model is presented to present theories of blockholder governance through both voice (direct intervention) and exit (selling one's shares).
Journal ArticleDOI
The Effect of Liquidity on Governance
TL;DR: In this paper, the effect of stock liquidity on blockholder governance was studied, showing that liquidity reduces the likelihood that a blockholder governs through voice (intervention) as shown by the greater propensity to file Schedule 13Gs (passive investment) than 13Ds (active investment).
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