Activist Arbitrage in M&A Acquirers

Influencing Control: Jawboning in Risk Arbitrage

“…In such cases, activists argue that the acquirer is offering too high a price or has not conducted sufficient diligence, and hence aim to block the deal (if it is deemed value‐destroying) or to modify the terms in favor of the acquirer. In such cases, in contrast to passive arbitrageurs who short the acquirer, activist arbitrageurs long the acquirer and hope to profit from value improvement rather than from spread convergence (Jiang, Li, and Mei ()). In our sample, there is no concurrence of activism on either the target or the acquirer side.…”

Activism and empire building

“…2 See "Tech Firms Seek Ways to Fend Off Activist Investors", The Wall Street Journal, May 26, 2015. 3 Jiang, Li, and Mei (2018b) study cases in which activists target acquirers after M&A announcement to affect deal terms or block a deal. Instead, we focus on activist campaigns in which the activist arrives before a deal is announced.…”

Is the CEOs’ financial and accounting education experience valuable? Evidence from the perspective of M&A performance

“…As an innovative form of M&A contracts, performance commitment is adopted in more and more M&A transactions. Although performance commitment has many advantages (Yang et al, 2018) such as reducing information asymmetry, encouraging management to fulfill their responsibilities, and reducing the cost of M&A, there are also risks that lead to collusion in arbitrage and earnings management between acquirers and targets (Hou et al, 2015;Jiang et al, 2018). To exclude this alternative explanation, we control the impact of performance commitment in regression.…”