Blockholder Disclosure Thresholds and Hedge Fund Activism

Guillem Ordonez-Calafi*, Dan Bernhardt

*Corresponding author for this work

Research output: Contribution to journalArticle (Academic Journal)peer-review

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Blockholder disclosure thresholds shape incentives for hedge fund activism, which are jointly determined with real investment and managerial behavior. Uninformed investors value lower thresholds (more transparency) when the cost of trading against an informed activist outweighs the benefits of the activist's disciplining of management. Conversely, activists may desire disclosure thresholds if the threat of their participation discourages managerial malfeasance, which is their source of profits. Hedge fund activism can be excessive: if market opacity sufficiently harms uninformed investors, the costs of reduced real investment outweigh the social benefits from managerial disciplining, and society benefits from lower thresholds.
Original languageEnglish
Pages (from-to)2834-2859
Number of pages26
JournalJournal of Financial and Quantitative Analysis
Issue number7
Early online date31 Jan 2022
Publication statusE-pub ahead of print - 31 Jan 2022

Bibliographical note

Publisher Copyright:
© 2022 The Author(s). Published by Cambridge University Press on behalf of the Michael G. Foster School of Business, University of Washington.

Structured keywords

  • AF Corporate Finance
  • AF Financial Markets


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