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Activist manipulation dynamics
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| Authors and Corporations: | , , , |
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| Other Authors: | Cisternas, Gonzalo [Author] • Kolb, Aaron [Author] • Viswanathan, S. [Author] |
| Type of Resource: | E-Book |
| Language: | English |
| published: | |
| Series: |
Federal Reserve Bank of New York: Staff reports ; no. 1030 (September 2022)
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| Subjects: | |
| Source: | Verbunddaten SWB Lizenzfreie Online-Ressourcen |
| Summary: | Two activists with correlated private positions in a firm's stock, trade sequentially before simultaneously exerting effort that determines the firm's value. We document the existence of a novel linear equilibrium in which an activist's trades have positive sensitivity to her block size, but such orders are not zero on average: the leader activist manipulates the price to induce the follower to acquire a larger position and thus add more value. We examine the implications of this equilibrium for market outcomes and discuss its connection with the prominent phenomenon of "wolf-pack" activism-multiple hedge funds engaging in parallel with a target firm. We also explore the possibility of other equilibria where the activists trade against their initial positions. |
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| Physical Description: | 1 Online-Ressource (circa 55 Seiten); Illustrationen |