会议专题

When Bad Stocks Make Good Investments: The Role of Hedge Funds in Leveraged Buyouts

I examine the role of hedge funds in leveraged buyout transactions. I find significant increases in hedge fund holdings of buyout targets before the announcement. The presence of hedge funds as shareholders of the target firm prior to the announcement is positively related to initial buyout premiums. This effect is robust and economically significant: A two standard deviation increase in the hedge fund ownership of the target before the announcement is associated with an increase of 7% in premiums. I also show that this relationship is stronger for firms with less liquid stocks. Moreover, for low-premium offers, greater hedge fund net buying during the announcement quarter is associated with a greater likelihood and magnitude of an upward revision of the premium. The evidence is consistent with the hypothesis that hedge funds play an active and strategic role and increase the wealth of target shareholders.

Hedge funds leveraged buyouts (LBOs) hold-out power large shareholders

Jiekun Huang

Carroll School of Management,Boston College,Chestnut Hill,MA,02467

国际会议

2008年中国金融国际年会

大连

英文

1-37

2008-07-02(万方平台首次上网日期,不代表论文的发表时间)