scholarly journals Standing on the Shoulders of Giants: The Effect of Passive Investors on Activism

2016 ◽  
Author(s):  
Ian Appel ◽  
Todd Gormley ◽  
Donald Keim
Keyword(s):  
Passive Investors

Going the Distance

2020 ◽  
Author(s):  
Ron Harris
Keyword(s):  
Large Scale ◽  
Western Europe ◽  
Family Firms ◽  
Global Trade ◽  
Long Distance ◽  
Business Corporation ◽  
Modern Economy ◽  
Key Factor ◽  
Silk Route ◽  
Passive Investors

Before the seventeenth century, trade across Eurasia was mostly conducted in short segments along the Silk Route and Indian Ocean. Business was organized in family firms, merchant networks, and state-owned enterprises, and dominated by Chinese, Indian, and Arabic traders. However, around 1600 the first two joint-stock corporations, the English and Dutch East India Companies, were established. This book tells the story of overland and maritime trade without Europeans, of European Cape Route trade without corporations, and of how new, large-scale, and impersonal organizations arose in Europe to control long-distance trade for more than three centuries. It shows that by 1700, the scene and methods for global trade had dramatically changed: Dutch and English merchants shepherded goods directly from China and India to northwestern Europe. To understand this transformation, the book compares the organizational forms used in four major regions: China, India, the Middle East, and Western Europe. The English and Dutch were the last to leap into Eurasian trade, and they innovated in order to compete. They raised capital from passive investors through impersonal stock markets and their joint-stock corporations deployed more capital, ships, and agents to deliver goods from their origins to consumers. The book explores the history behind a cornerstone of the modern economy, and how this organizational revolution contributed to the formation of global trade and the creation of the business corporation as a key factor in Europe's economic rise.

scholarly journals Institutional Investor Attention and Firm Disclosure

2020 ◽  
Vol 95 (6) ◽  
pp. 1-21 ◽  
Author(s):  
Inna Abramova ◽  
John E. Core ◽  
Andrew Sutherland
Keyword(s):  
Significant Variation ◽  
Information Quality ◽  
Institutional Ownership ◽  
Institutional Investor ◽  
Short Term ◽  
Investor Attention ◽  
Bid Ask Spread ◽  
Abnormal Volume ◽  
Passive Investors ◽  
Jel Classifications

ABSTRACT We study how short-term changes in institutional owner attention affect managers' disclosure choices. Holding institutional ownership constant and controlling for industry-quarter effects, we find that managers respond to attention by increasing the number of forecasts and 8-K filings. Rather than alter the decision of whether to forecast or to provide more informative disclosures, attention causes minor disclosure adjustments. This variation in disclosure is primarily driven by passive investors. Although attention explains significant variation in the quantity of disclosure, we find little change in abnormal volume and volatility, the bid-ask spread, or depth. Overall, our evidence suggests that management responds to temporary institutional investor attention by making disclosures that have little effect on information quality or liquidity. JEL Classifications: G23; G32; G34; G12; G14.

scholarly journals Standing on the Shoulders of Giants: The Effect of Passive Investors on Activism

2018 ◽  
Vol 32 (7) ◽  
pp. 2720-2774 ◽  
Author(s):  
Ian R Appel ◽  
Todd A Gormley ◽  
Donald B Keim
Keyword(s):  
Mutual Funds ◽  
Institutional Investors ◽  
Free Rider ◽  
Recent Growth ◽  
Editorial Decision ◽  
Proxy Fights ◽  
Board Representation ◽  
Passive Investors

Abstract We analyze whether the growing importance of passive investors has influenced the campaigns, tactics, and successes of activists. We find activists are more likely to seek board representation when a larger share of the target company’s stock is held by passively managed mutual funds. Furthermore, higher passive ownership is associated with increased use of proxy fights, settlements, and a higher likelihood the activist achieves board representation or the sale of the targeted company. Our findings suggest that the recent growth of passive institutional investors mitigates free-rider problems and facilitates activists’ ability to engage in costly, value-enhancing forms of monitoring. Received September 28, 2016; editorial decision August 18, 2018 by Editor Andrew Karolyi.

Passive Investors

2018 ◽  
Author(s):  
Jill E. Fisch ◽  
Assaf Hamdani ◽  
Steven Davidoff Solomon
Keyword(s):  
Passive Investors

Passive Investors are Passive Monitors

2018 ◽  
Author(s):  
Davidson Heath ◽  
Daniele Macciocchi ◽  
Roni Michaely ◽  
Matthew C. Ringgenberg
Keyword(s):  
Passive Investors

scholarly journals Diversification, Common Ownership, and Strategic Incentives

2020 ◽  
Vol 110 ◽  
pp. 561-564
Author(s):  
Albert Banal-Estañol ◽  
Jo Seldeslachts ◽  
Xavier Vives
Keyword(s):  
Investment Strategies ◽  
Product Markets ◽  
Common Ownership ◽  
Money Flows ◽  
Strategic Incentives ◽  
Rival Firms ◽  
Passive Investors

We argue that within-industry investor diversification is directly related to common ownership incentives (profit loads on rival firms by the manager of a firm) in product markets. Because of their respective investment strategies, passive investors are naturally more diversified than active investors. If more money flows from active toward passive investors, then common ownership incentives increase. The opposite occurs if active investors receive more money flows. This pattern is shown in two example US industries for the period 2004-2012.

Do Venture Capital Firms Play as Supportive Mentors or Free-riders? Evidence from China

2017 ◽  
Vol 22 (4) ◽  
Author(s):  
Xi Yang ◽  
Su-Sheng Wang
Keyword(s):  
Venture Capital ◽  
Performance Enhancement ◽  
Random Effect ◽  
Sample Selection ◽  
Superior Performance ◽  
Entrepreneurial Firms ◽  
Ex Post ◽  
Ex Ante ◽  
Venture Capital Firms ◽  
Passive Investors

This paper aims to investigate whether Venture Capital Firms in China play as active investors, who seize to provide the funded entrepreneurial firms monitoring assistance and value-adding service for the performance enhancement, or just act as passive investors, who care little about the growth of the funded firms but the opportunity of freeriding on the IPO process to gain fast and huge economic rents. Utilizing the panel data of listed companies on the Chinese SME Board, this paper employs the PSM methodology and the panel regression models with random effect to control the sample selection bias, and disentangle VC firm’s ex-ante screening effect from the ex-post effect. The analysis reveals that Venture Capital firms are able to select the entrepreneurial firms with superior performance before the first round of VC investment, but fail to enhance the development of funded ventures after the involvement. Although the venture backed firms present the performance superiority over the non-venture backed peers overall, this difference is just attributed to VC firm’s ex-ante screening effects. VC firms do not demonstrate the ex-post value-adding effect, rather to some extent they even exert hampering effect on the performance of funded firms after the investment was made.

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