Denis Schweizer (WHU – Otto Beisheim School of Management) and Mark Mietzner (Darmstadt University of Technology ; Zeppelin University) have posted “Hedge Funds versus Private Equity Funds as Shareholder Activists in Germany – Differences in Value Creation”, Journal of Economics and Finance (Forthcoming).
The abstract is as follows:
We investigate the valuation effects of German firms targeted by hedge funds and by private equity investors. We argue that both types of investors differ from other blockholders by their strong motivation and ability to actively engage and reduce agency costs. Consequently, we find positive abnormal returns following a change in ownership structure. However, these effects differ markedly between both investors, as proxy variables for agency costs only explain the market reaction for our private equity subsample. We conclude that private equity funds seem to be more successful at creating shareholder value, which could be due to their longer-term perspective and a higher adaptability to the surrounding corporate governance.