Dissertation 20190621.pdf (1.24 MB)

FOLLOW THE MONEY: INSIDER TRADING AND PERFORMANCE OF HEDGE FUND ACTIVISM TARGETS

Download (1.24 MB)
thesis
posted on 13.08.2019, 19:21 by Chao Gao
Hedge fund activism announcements are associated with positive market reactions, and they introduce information asymmetry between insiders and outside investors. Target firm insiders have superior information about the campaign and play an important role in the campaign negotiation. This study examines insiders’ behavior as information asymmetry rises following the campaign announcement. Insiders increase trading in their own firms in response to the campaign announcement. These post-announcement insider trades have additional return predictability than insider trades in other times. Post-announcement insider buys predict higher probabilities of achieving successful campaign outcomes including management turnovers, increases in payout, and corporate restructurings, and higher value of these outcomes. I also find evidence that insiders use campaign resistance and trading interactively to achieve higher wealth gain.

History

Degree Type

Doctor of Philosophy

Department

Management

Campus location

West Lafayette

Advisor/Supervisor/Committee Chair

John J. McConnell

Advisor/Supervisor/Committee co-chair

Mara Faccio

Additional Committee Member 2

Xiaoyan Zhang

Additional Committee Member 3

Deniz Yavuz

Additional Committee Member 4

Chengdong Yin

Licence

Exports

Logo branding

Licence

Exports