IDEAS home Printed from https://ideas.repec.org/p/hal/wpaper/hal-02145379.html
   My bibliography  Save this paper

Determinants of hedge fund activism: development of a model of ex-ante decision-making for corporate stake
[Les déterminants de l'activisme des hedge funds : élaboration d'un modèle de décision ex-ante de prise de participation]

Author

Listed:
  • Quôc Thai Huynh

    (CEREGE [Poitiers] - Centre de recherche en gestion [EA 1722] - IAE Poitiers - Institut d'Administration des Entreprises (IAE) - Poitiers - UP - Université de Poitiers = University of Poitiers - UP - Université de Poitiers = University of Poitiers - ULR - La Rochelle Université)

Abstract

Hedge fund activists are the new promoters of corporate governance through their sustained involvement in the capital of the targeted firms. They use their voting rights and have no fear to sit on the boards of directors to achieve their goals. The high idiosyncratic risk they bear, raises the question of the determinants of this ex-ante strategy of concentration. In this paper, we propose a model of ex-ante decision-making representing the different variables characterizing the choice of the target for the hedge funds.

Suggested Citation

  • Quôc Thai Huynh, 2019. "Determinants of hedge fund activism: development of a model of ex-ante decision-making for corporate stake [Les déterminants de l'activisme des hedge funds : élaboration d'un modèle de décision ex-," Working Papers hal-02145379, HAL.
    • Handle: RePEc:hal:wpaper:hal-02145379
    Note: View the original document on HAL open archive server: https://hal.science/hal-02145379
    as

    Download full text from publisher

    File URL: https://hal.science/hal-02145379/document
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Clifford G. Holderness, 2003. "A survey of blockholders and corporate control," Economic Policy Review, Federal Reserve Bank of New York, vol. 9(Apr), pages 51-64.
    2. Gantchev, Nickolay, 2013. "The costs of shareholder activism: Evidence from a sequential decision model," Journal of Financial Economics, Elsevier, vol. 107(3), pages 610-631.
    3. Alon Brav & Wei Jiang & Frank Partnoy & Randall Thomas, 2008. "Hedge Fund Activism, Corporate Governance, and Firm Performance," Journal of Finance, American Finance Association, vol. 63(4), pages 1729-1775, August.
    4. Alex Edmans, 2014. "Blockholders and Corporate Governance," Annual Review of Financial Economics, Annual Reviews, vol. 6(1), pages 23-50, December.
    5. Henry G. Manne, 1965. "Mergers and the Market for Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 73, pages 110-110.
    6. Shleifer, Andrei & Vishny, Robert W, 1986. "Large Shareholders and Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 461-488, June.
    7. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    8. Marco Becht & Julian Franks & Colin Mayer & Stefano Rossi, 2010. "Returns to Shareholder Activism: Evidence from a Clinical Study of the Hermes UK Focus Fund," NBER Chapters, in: Corporate Governance, National Bureau of Economic Research, Inc.
    9. Veronique Bessiere & Michael Kaestner & Anne-Laurence Lafont, 2011. "Hedge fund activism: insights from a French clinical study," Applied Financial Economics, Taylor & Francis Journals, vol. 21(16), pages 1225-1234.
    10. Henry G. Manne, 1965. "Mergers and the Market for Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 73, pages 351-351.
    11. Stuart L. Gillan & Laura T. Starks, 2007. "The Evolution of Shareholder Activism in the United States," Journal of Applied Corporate Finance, Morgan Stanley, vol. 19(1), pages 55-73, January.
    12. Michel Aglietta & Sandra Rigot, 2009. "Hedge funds : la fin du laissez-faire," Revue économique, Presses de Sciences-Po, vol. 60(3), pages 693-702.
    13. Smith, Michael P, 1996. "Shareholder Activism by Institutional Investors: Evidence for CalPERS," Journal of Finance, American Finance Association, vol. 51(1), pages 227-252, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Becker, Bo & Cronqvist, Henrik & Fahlenbrach, Rüdiger, 2011. "Estimating the Effects of Large Shareholders Using a Geographic Instrument," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 46(4), pages 907-942, August.
    2. Maria Goranova & Rahi Abouk & Paul C. Nystrom & Ehsan S. Soofi, 2017. "Corporate governance antecedents to shareholder activism: A zero-inflated process," Strategic Management Journal, Wiley Blackwell, vol. 38(2), pages 415-435, February.
    3. Denes, Matthew R. & Karpoff, Jonathan M. & McWilliams, Victoria B., 2017. "Thirty years of shareholder activism: A survey of empirical research," Journal of Corporate Finance, Elsevier, vol. 44(C), pages 405-424.
    4. Jiang, George J. & Liu, Chang, 2021. "Getting on board: The monitoring effect of institutional directors," Journal of Corporate Finance, Elsevier, vol. 67(C).
    5. Burkart, Mike & Lee, Samuel, 2018. "Activism and Takeovers," CEPR Discussion Papers 12616, C.E.P.R. Discussion Papers.
    6. João A. C. Santos & Kristin E. Wilson, 2017. "Does Banks’ Corporate Control Lower Funding Costs? Evidence from US Banks’ Control Over Firms’ Voting Rights," Journal of Financial Services Research, Springer;Western Finance Association, vol. 51(3), pages 283-311, June.
    7. Szilagyi, P.G., 2007. "Corporate governance and the agency costs of debt and outside equity," Other publications TiSEM 9520d40a-224f-43a8-9bf9-b, Tilburg University, School of Economics and Management.
    8. Anisa Safiah Maznorbalia & Muhammad Aiman Awalluddin & Ardzlyn Hawatul Yuhanis Ayob, 2023. "Exploring the role of institutional investors in voting, monitoring and dialogue engagement in mitigating agency conflict in Malaysia’s public listed companies," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-9, December.
    9. Edmans, Alex & Holderness, Clifford, 2016. "Blockholders: A Survey of Theory and Evidence," CEPR Discussion Papers 11442, C.E.P.R. Discussion Papers.
    10. Siala Bouaziz Souha & Jarboui Anis & David McMillan, 2016. "Corporate governance and firm characteristics as explanatory factors of shareholder activism: Validation through the French context," Cogent Economics & Finance, Taylor & Francis Journals, vol. 4(1), pages 1150407-115, December.
    11. Mike Burkart & Samuel Lee, 2022. "Activism and Takeovers," The Review of Financial Studies, Society for Financial Studies, vol. 35(4), pages 1868-1896.
    12. Burkart, Mike & Lee, Samuel, 2022. "Activism and takeovers," LSE Research Online Documents on Economics 111564, London School of Economics and Political Science, LSE Library.
    13. Quôc Thai Huynh, 2020. "Réflexion sur les problématiques contradictoires de gouvernance autour de la bataille boursière entre LVMH et Hermès (2010-2014)," Working Papers hal-02523075, HAL.
    14. Céline Du Boys, 2009. "Is payout policy part of the corporate governance system? The case of France," Post-Print hal-01290737, HAL.
    15. Oehler, Andreas & Schmitz, Jonas Tobias, 2021. "Does intensified communication of hedge funds with letters affect abnormal returns?," International Review of Economics & Finance, Elsevier, vol. 76(C), pages 127-142.
    16. Ben Arfa, Nouha & Karmani, Majdi & Labaronne, Daniel, 2017. "Antecedents of hedge fund activism in French listed target firms," Research in International Business and Finance, Elsevier, vol. 42(C), pages 1315-1326.
    17. Wolfgang Drobetz & Pascal Pensa & Markus M. Schmid, 2007. "Estimating the Cost of Executive Stock Options: evidence from Switzerland," Corporate Governance: An International Review, Wiley Blackwell, vol. 15(5), pages 798-815, September.
    18. Travis L. Johnson & Nathan Swem, 2017. "Reputation and Investor Activism: A Structural Approach," Finance and Economics Discussion Series 2017-036r1, Board of Governors of the Federal Reserve System (U.S.), revised 15 Oct 2020.
    19. Nicole Boyson & Robert Mooradian, 2011. "Corporate governance and hedge fund activism," Review of Derivatives Research, Springer, vol. 14(2), pages 169-204, July.
    20. Helwege, Jean & Intintoli, Vincent J. & Zhang, Andrew, 2012. "Voting with their feet or activism? Institutional investors’ impact on CEO turnover," Journal of Corporate Finance, Elsevier, vol. 18(1), pages 22-37.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:wpaper:hal-02145379. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.