• HFRC Forschung

Detailübersicht

Publication The returns to hedge fund investments in Germany

Type

Refereed Article

Year

2015

Author(s)

Wolfgang Bessler
Wolfgang Drobetz
Julian Holler

Journal

European Financial Management

Volume

21

Pages

106-147

Research Area

Alternative Investments

Keywords

Corporate governance, hedge funds, event studies, long-run performance

Abstract

Recent regulatory changes in the German financial system shifted corporate control activities from universal banks to other capital market participants. Particularly hedge funds took advantage of the resulting control vacuum by acquiring stakes in weakly governed and less profitable firms. We document that, on average, hedge funds increased shareholder value in the short- and long-run. However, more aggressive hedge funds generated only initially higher returns and their outperformance quickly reversed, whereas non-aggressive hedge funds ultimately outperformed their aggressive peers. These findings suggest that aggressive hedge funds attempt to expropriate the target firm’s shareholders by exiting at temporarily increased share prices.

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