Active block investors and corporate governance around the world

In this paper, we examine a sample of 3119 minority block acquisitions around the world. One in seven firms are targeted by active investors who either have their own representatives on the board or in the extreme case, replace existing CEOs. We find that active investors are more prevalent in count...

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Bibliographic Details
Published in:Journal of international financial markets, institutions & money institutions & money, 2015-11, Vol.39, p.181-194
Main Authors: Kim, Hugh, Liao, Rose C., Wang, Yan
Format: Article
Language:English
Subjects:
Block acquisitions
Corporate governance
International corporate governance
Investment
Investments
Profitability
Studies
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Summary:In this paper, we examine a sample of 3119 minority block acquisitions around the world. One in seven firms are targeted by active investors who either have their own representatives on the board or in the extreme case, replace existing CEOs. We find that active investors are more prevalent in countries with good investor protection. Further, firms targeted by active investors experience significantly higher announcement returns and a significantly higher increase in profitability, sales, and investment expenditures subsequent to the block acquisition, especially in countries with good investor protection.
ISSN:1042-4431
1873-0612
DOI:10.1016/j.intfin.2015.05.009