Title: Shareholder activism by hedge funds in a concentrated ownership environment: an empirical study for Germany

Authors: Maximilian Stadler; Dodo zu Knyhausen-Aufseß; Lars Schweizer

Addresses: Technische Universität Berlin, Straße des 17. Juni 135, D-10623 Berlin, Germany ' Technische Universität Berlin, Straße des 17. Juni 135, D-10623 Berlin, Germany ' Goethe University Frankfurt, Grüneburgplatz 1, D-60323 Frankfurt am Main, Germany

Abstract: This study seeks to extend hedge fund activism research to a country where the ownership structure is dominated by large major shareholders. Until now, studies about hedge fund activism mainly treated countries with dispersed ownership structures. Using an event study with 133 German hedge fund events between January 2000 and April 2008, we found that hedge fund activism shows significant positive short-term abnormal returns, which do not hold in the long term. It showed that family shareholders have a significant influence on the success of hedge fund activism. Moreover, it could be measured that hedge fund activism is especially successful if it tries to force the company to sell assets. This study provides empirical support for the influence of the ownership structure on the success of hedge fund activism. It indicates that large major shareholders impact hedge fund activism.

Keywords: corporate governance; event study; hedge funds; ownership structure; shareholder activism; family shareholders; concentrated ownership; Germany; hedge fund activism; abnormal returns; large shareholders; major shareholders.

DOI: 10.1504/IJFSM.2015.066570

International Journal of Financial Services Management, 2015 Vol.8 No.1, pp.58 - 82

Received: 03 Jun 2014
Accepted: 17 Aug 2014
Published online: 24 Dec 2014 *

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