Intra-Industry Effects of Shareholder Activism in Germany - Is There a Difference between Hedge Fund and Private Equity Investments?

Schmalenbach Business Review, Vol. 63, pp. 151-185, April 2011

35 Pages Posted: 5 Jul 2011

See all articles by Mark Mietzner

Mark Mietzner

Leipzig University of Applied Sciences - HTWK Leipzig

Denis Schweizer

Concordia University

Marcel Tyrell

Zeppelin University

Date Written: April 1, 2011

Abstract

We investigate the valuation effects of industry rivals on German firms targeted by hedge funds and private equity investors. We argue that both types of investors differ from other block holders due to their strong motivation and ability to actively engage and monitor. We find that the announcement of a change in ownership structure generates statistically significant short- and long-term intra-industry effects for rivals to the respective private equity and hedge fund targets. However, these effects differ markedly between hedge fund investments and private equity investments. We conclude that hedge funds are more aggressive than private equity investors in implementing a shareholder orientation.

Keywords: corporate governance, hedge fund, information signaling, intra-industry effects, private equity, rivals, shareholder activism

JEL Classification: G14, G32, G34

Suggested Citation

Mietzner, Mark and Schweizer, Denis and Tyrell, Marcel, Intra-Industry Effects of Shareholder Activism in Germany - Is There a Difference between Hedge Fund and Private Equity Investments? (April 1, 2011). Schmalenbach Business Review, Vol. 63, pp. 151-185, April 2011, Available at SSRN: https://ssrn.com/abstract=1879170

Mark Mietzner (Contact Author)

Leipzig University of Applied Sciences - HTWK Leipzig ( email )

Leipzig
Germany

Denis Schweizer

Concordia University ( email )

1455 de Maisonneuve Blvd. W.
Montreal, Quebec H3G 1M8
Canada
+1 (514) 848-2424 ext. 2926 (Phone)
+1 (514) 848-4500 (Fax)

HOME PAGE: http://www.concordia.ca/jmsb/faculty/denis-schweizer.html

Marcel Tyrell

Zeppelin University ( email )

Am Seemooser Horn 20
Friedrichshafen, Lake Constance 88045
Germany

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