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Who Is Afraid of BlackRock?
[Connected stocks]

Author

Listed:
  • Massimo Massa
  • David Schumacher
  • Yan Wang

Abstract

We exploit the merger between BlackRock and Barclays Global Investors to study how changes in expected ownership concentration affect the investment behavior of funds and the cross-section of stocks worldwide. We find that funds with open-end structures and large exposure to commonly held stocks begin avoiding these stocks following the merger announcement. This leads to a permanent change in the composition of institutional ownership and a negative price and liquidity impact. We confirm these results in a large sample of global asset management mergers. Our findings suggest that market participants behave strategically in response to changes in expected financial fragility.

Suggested Citation

  • Massimo Massa & David Schumacher & Yan Wang, 2021. "Who Is Afraid of BlackRock? [Connected stocks]," The Review of Financial Studies, Society for Financial Studies, vol. 34(4), pages 1987-2044.
    • Handle: RePEc:oup:rfinst:v:34:y:2021:i:4:p:1987-2044.
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    File URL: http://hdl.handle.net/10.1093/rfs/hhaa081
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    Citations

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    Cited by:

    1. Mariassunta Giannetti & Chotibhak Jotikasthira, 2024. "Bond Price Fragility and the Structure of the Mutual Fund Industry," The Review of Financial Studies, Society for Financial Studies, vol. 37(7), pages 2063-2109.
    2. Tang, Xudong & Wang, Lin, 2024. "When your friend takes a fall: Spillovers of patent infringement lawsuits on firm innovation via cross-owners," Economic Modelling, Elsevier, vol. 131(C).
    3. Aragon, George O. & Kim, Min S., 2023. "Fire sale risk and expected stock returns," Journal of Financial Economics, Elsevier, vol. 149(3), pages 578-609.
    4. Hvidkjær, Søren & Massa, Massimo & Rzeźnik, Aleksandra, 2023. "Co-illiquidity management," Journal of Empirical Finance, Elsevier, vol. 74(C).
    5. Huang, Jing-Zhi & Wang, Yan & Wang, Ying, 2024. "Does ownership concentration affect corporate bond volatility? Evidence from bond mutual funds," Journal of Banking & Finance, Elsevier, vol. 165(C).

    More about this item

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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