Date of Award
Bachelor of Arts
Hedge fund activism has been attracting more attention nowadays. On the 14th of March, 2016, two democratic senators introduced a bill “that would take aim at activist hedge funds and their ability to act together in “wolf packs” to overtake public companies” (Moyer, 2016). On 4th of April, 2016, the U.S. sues ValueAct, which is an activist hedge fund, by saying that “[it] violated Antitrust Law” (Picker, 2016). These are just few of the evidence showing that hedge fund activism is attracting more attention in both the financial and political realm nowadays. Hedge fund activism, defined as hedge funds using their large unregulated pool of capital to take on substantial stakes, usually over 5%, on publicly traded companies, while implementing changes to the way the target firms in hope of making the target firms more valuable in many ways. The existing literature reviews that there is a large bodies of studies that is devoted to finding or disproving the long-term benefits that activist hedge funds bring to the target firms. The proponents of hedge fund activism argue that hedge funds are good catalysts that bring changes to the target firms that are both beneficial to the short run and the long run. However, the opponents of hedge fund activism rebut by saying that the econometric analysis that proponents performed in order to show the long term benefits is fundamentally flawed and that the econometric analysis does not provide meaningful information about the benefits that such activities bring in the long run. Whether hedge fund activism does create value in the long run is still an on-going debate.
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Cheung, Winston, "Hedge Fund Activism and Short Term Price Impacts: From the Perspective of Hedge Funds" (2016). Economics Student Theses and Capstone Projects. 17.