Wolves at the Door: A Closer Look at Hedge Fund Activism

• 成果类型: Article
• 署名作者: Wong, Yu Ting Forester
• 署名单位: University of Southern California
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2019.3312
• 发表日期: 2020
• 页码: 2347-2371
• 关键词: HEDGE FUND ACTIVISM; corporate governance; wolf pack activism; takeovers; investor coordination

摘要

Most investor coordination remains undisclosed. I provide empirical evidence on the extent and consequences of investor coordination in the context of hedge fund activism, in which potential benefits and costs from coordination are especially pronounced. In particular, I examine whether hedge fund activists orchestrate wolf packs-that is, groups of investors willing to acquire shares in the target firm before the activist's campaign is publicly disclosed via a 13D filing-as a way to support the campaign and strengthen the activist's bargaining position. Using a novel hand-collected data set, I develop a method to identify the formation of wolf packs before the 13D filing. I investigate two competing hypotheses: the Coordinated Effort Hypothesis (wolf packs are orchestrated by lead activists to circumvent securities regulations about groups of investors) and the Spontaneous Formation Hypothesis (wolf packs spontaneously arise because investors independently monitor and target the same firms at about the same time). A number of tests rule out the Spontaneous Formation Hypothesis and provide support for the Coordinated Effort Hypothesis. Finally, the presence of a wolf pack is associated with various measures of the campaign's success.