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)1-48
JournalJournal of Financial and Quantitative Analysis
Early online date31 Jan 2022
Publication statusE-pub ahead of print - 31 Jan 2022

Bibliographical note

Publisher Copyright:
© 2022 Cambridge University Press. All rights reserved.

Structured keywords

  • AF Corporate Finance
  • AF Financial Markets


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