Who is Afraid of Blackrock?
77 Pages Posted: 6 Sep 2016
There are 2 versions of this paper
Who Is Afraid of BlackRock?
Date Written: August 2016
Abstract
We use the merger of BlackRock with Barclays Global Investors to study how changes in ownership concentration affect the investment behavior of financial institutions and the cross-section of stocks worldwide. We find that other institutions begin avoiding stocks that experience a merger-related increase in ownership concentration. As a result, affected stocks experience a permanent and negative price, liquidity and volatility impact. We confirm these effects in a large sample of asset management mergers over a ten year period. The interpretation that institutions strategically avoid stocks with an elevated risk of future fragility enjoys the strongest support in the data.
Keywords: Asset Management Merger, Limits to Arbitrage, liquidity, Strategic Interactions
JEL Classification: G11, G12, G14, G15, G23
Suggested Citation: Suggested Citation