CEF.UP – FIN Webinar

Wednesday – June  2^nd, 2021, at 1:00 p.m.

Glass Half Full or Half Empty?  Activists, Short Sellers, and Disagreement

Pedro Saffi – Cambridge Judge Business School (joint work with Tao Li and Daheng Yang)

Abstract: We study events in which activist hedge funds and short sellers target the same stock, using European data on activism and mandatory disclosures of large short positions. The likelihood of activist targeting and the probability of a successful campaign are higher in the presence of large short sellers, with an even larger effect when investor disagreement is high. Hedge fund activism is associated with a reduction in short interest, but it does not affect the likelihood of a large short position. Finally, we show that hedge fund activism generates higher abnormal returns when large short sellers are present, especially when activists achieve their stated goals.