Wolf pack activism

Brav, Alon, Dasgupta, Amil ORCID: 0000-0001-8474-9470 and Mathews, Richmond (2015) Wolf pack activism. Financial Markets Group Discussion Papers (742). Financial Markets Group, The London School of Economics and Political Science, London, UK.

Text (DP742) - Published Version Download (371kB)

• Author
• https://www.fmg.ac.uk/publications/discu...

Abstract

It is alleged that activist hedge funds congregate around a common target, with one acting as the "lead" activist and others as peripheral activists, or "wolf pack" members. We model this phenomenon as a coordination game, and show that the concentration of capital and skill matters: Holding constant total activist ownership, the presence of a lead activist increases the probability of successful activism due to improved coordination among activists. We model the dynamics of share acquisition by wolf pack members and the lead activist: Block acquisition by the lead activist spurs significant entry by wolf pack members, while the lead activist acquires only if the expected wolf pack is large enough. Finally, we provide predictions concerning which wolf pack activists will buy ahead of the lead activist, and which will wait to acquire until after the lead activist's stake is announced.

Item Type:	Monograph (Discussion Paper)
Official URL:	https://www.fmg.ac.uk/
Additional Information:	© 2015 The Authors
Divisions:	Finance
Subjects:	H Social Sciences > HC Economic History and Conditions H Social Sciences > HG Finance
JEL classification:	G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers; Acquisitions; Restructuring; Corporate Governance G - Financial Economics > G2 - Financial Institutions and Services > G23 - Pension Funds; Other Private Financial Institutions
Date Deposited:	08 Jun 2023 13:33
Last Modified:	16 Sep 2023 00:01
URI:	http://eprints.lse.ac.uk/id/eprint/119008

Actions (login required)

View Item