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Finance Department's Lecture

TOPIC:           HEDGE FUND ACTIVISM, FIRM VALUATION AND STOCK RETURNS
SPERKER:  Ye Wang
TIME:             10:00, 18 Oct, 2018
PLACE:          Room 1008, Business Building

ABSTRACT:
This paper studies the association between hedge fund activism and firm value, using matching procedures to incorporate the nonrandom selection of target firms by activist hedge funds. We find that targets improve less in value (Q) subsequent to activism starts than ex-ante similarly poorly performing control firms that are not subject to activist campaigns. Further, long-term abnormal stock returns of both target and control firms are similarly positive and significant. However, activist hedge funds have strong stock selection as well as strong trading skills that allow them to outperform.