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Hedge Fund Activism and Corporate M&A Decisions
- Source :
- Management Science. 68:1378-1403
- Publication Year :
- 2022
- Publisher :
- Institute for Operations Research and the Management Sciences (INFORMS), 2022.
-
Abstract
- This paper shows that hedge fund activism is associated with a decrease in mergers and acquisitions (M&A) and offer premiums and an increase in stock and operating performance. Activist hedge funds improve target firms’ M&A performance by reducing poor M&A, diversifying M&A, and the M&A of firms with multiple business segments. Activist hedge funds improve target firms’ M&A decisions by influencing their governance practices. We show that our results are unlikely driven by selection bias. Overall, activist hedge funds play an important role in the market for corporate control by increasing the efficiency of target firms’ M&A activities through interventions. This paper was accepted by Gustavo Manso, finance.
- Subjects :
- Selection bias
050208 finance
business.industry
Strategy and Management
media_common.quotation_subject
Corporate governance
05 social sciences
Event study
Financial system
Management Science and Operations Research
Hedge fund
0502 economics and business
Mergers and acquisitions
Business
050207 economics
Stock (geology)
media_common
Subjects
Details
- ISSN :
- 15265501 and 00251909
- Volume :
- 68
- Database :
- OpenAIRE
- Journal :
- Management Science
- Accession number :
- edsair.doi...........26d8f32383eb00724cbe39656dcc79d0