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Author ORCID Identifier



Open Access Dissertation

Document Type


Degree Name

Doctor of Philosophy (PhD)

Degree Program


Year Degree Awarded


Month Degree Awarded


First Advisor

Ben Branch

Second Advisor

Nikunj Kapadia

Third Advisor

Hossein Kazemi

Fourth Advisor

Michael Lavine

Subject Categories

Finance and Financial Management


Chapter 1 compares and contrasts the activism styles and outcomes of hedge-fund activists versus traditional institutional activists in an attempt to understand what drives the returns of institutional activism. Contrary to the popular belief that hedge-fund activism is designed to achieve a short-term payoff at the expense of long-term profitability, I find some evidence consistent with the hypothesis that hedge-fund activists can be effective monitors, especially when multiple hedge funds collaborate on the monitoring efforts. This result is supported by examining the relations between the holdings by different types of hedge-fund activists and the outcomes of proposed M&A deals, such as acquirer announcement-period CARs, buy-and-hold abnormal returns, acquirer long-run operating performance, means of financing, deal status, and deal attitude. On the other hand, hedge funds that carry out individualistic activism efforts don't appear to exert effective monitoring efforts in the context of M&As. Concurring with the previous studies on pension-fund activism, this paper finds that traditional institutional activists, as represented by activist pension funds and several activist mutual funds, tend to be effective monitors of M&A acquirers. Additionally, cross-holding analysis of the two groups of institutional activists (hedge funds vs. non-hedge funds) provides further evidence corroborative of the hypothesis that cross-holding activists who realize gains in both acquirers and targets tend to be effective monitors at the first place.

Chapter 2 examines an expanded version of acquisition probability hypothesis proposed by Song and Walkling (2000). In contrast to the previous papers that find positive rival announcement-period abnormal returns, I find only rivals associated with value-creating deals experience positive announcement-period abnormal returns. In addition to studying the announcement-period abnormal returns, I also analyze the extent of impact on rivals around deal terminations and deal completions. The results show that rivals that experience higher announcement-period abnormal returns also tend to experience higher termination-period and completion-period returns, consistent with the predictions of the acquisition probability hypothesis. More direct tests of the hypothesis confirm that the rival announcement-period CARs are positively and significantly associated with the predicted probability of rivals becoming subsequent targets, and thus providing direct evidence corroborative of the acquisition probability hypothesis.

Chapter 3 studies the impact of CalPERS Focus List (CFL) program have on bondholders' wealth. In contrast to the extant research documenting positive abnormal returns to shareholders of the firms subject to pension fund activism, I find that CalPERS Focus List (CFL) program significantly reduces existing bondholders' wealth. In the year subsequent to the releases of CalPERS' Focus List, 57% of outstanding bonds of target firms underwent downgrade. Additionally, I find evidence of an expropriation of wealth from the bondholder to the shareholder based on long-horizon analysis. The source of wealth transfer from bondholders to stockholders appear to come from rapid asset sales of the CFL firms following the targeting.