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273th Biweekly Academic Forum

Published:2019-03-11  Views:

Topic: Does Experience Matter for Hedge Fund Managers? Effects of Industry Expertise on Hedge Fund Activism

Speaker: Yuzi CHEN is a Ph.D. candidate in Finance, Nanyang Business School of Nanyang Technological University. She obtained a master's degree from the School of Economics of Nankai University and the Department of Economics at the University of Birmingham, England. Her research interests include empirical corporate finance, corporate governance and institutional investors. Her papers have been selected in several international financial conferences, including Conference on Pacific Basin Finance, Economics, Accounting, and Management (New Jersey), Conference on Asia-Pacific Financial Markets (Seoul), and she was invited to present her papers at the Baruch College of the City University of New York, Temple University, City University of Hong Kong, Korea University and other universities.

Time: Mar. 13, 2019, Friday, Wednesday, 12:30-13:30

Venue: Room 913, Main Teaching Building in City Campus of CUFE

Moderator: Professor Zhigang HUANG, the School of Finance at CUFE

Abstract: In this paper, we examine whether hedge fund managers’ experience affects their activism. We find that hedge fund managers are more likely to choose a target that operates in an industry in which they have previous executive and/or outside director experience. Compared to target firms in which hedge fund managers do not have target industry experience, those in which hedge fund managers have target industry experience realize higher abnormal announcement returns and these managers are more likely to serve as a director on the target’s board. We further find a significant improvement in target post-acquisition operating performance when hedge fund managers have executive experience in the target industry. These findings suggest that a hedge fund manager’s industry expertise is an important source of value gains in hedge fund activism.

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