I wish to thank an anonymous referee, John Doukas (the editor), Emanuele Bajo, Giovanni Barone-Adesi, Suzanne Bellezza, Lorenzo Caprio, François Degeorge, Abe de Jong, Mara Faccio, Rosario Dell'Acquila, Michel Habib, David Hillier, Loriano Mancini, Maurizio Murgia, René Stulz, Marie Sushka, and Fabio Trojani. I also benefited from helpful comments of seminar participants at the Free University of Bozen-Bolzano, University of Bologna, the University of Lugano, the Università Cattolica of Milan, the 2003 and 2004 Swiss Doctoral Workshops in Finance in Gerzensee, the 2003 EFA Doctorial Tutorial in Glasgow, the 2003 AFFI meeting in Paris, the 2004 European Doctoral Seminar in Finance in Paris, the 2004 EFMA meeting in Basel, and the 2004 EFA meeting in Maastricht. The paper is based on my doctoral thesis and was written when I was at the University of Lugano. Part of this research has been carried out within the project on Corporate Finance of the National Center of Competence in Research ‘Financial Valuation and Risk Management’ (NCCR FINRISK). The NCCR FINRISK is a research programme supported by the Swiss National Science Foundation. Earlier drafts of the paper circulated under the title ‘Corporate minority investors: an empirical analysis’.
Corporate Raiders, Performance and Governance in Europe
Version of Record online: 23 OCT 2007
European Financial Management
Volume 13, Issue 5, pages 949–978, November 2007
How to Cite
Croci, E. (2007), Corporate Raiders, Performance and Governance in Europe. European Financial Management, 13: 949–978. doi: 10.1111/j.1468-036X.2007.00387.x
- Issue online: 23 OCT 2007
- Version of Record online: 23 OCT 2007
- corporate control;
- corporate raiders;
- event study;
- corporate governance
I analyse 136 block purchases made by corporate raiders in Europe between 1990 and 2001. Contrary to the hypothesis that these investors expropriate the target companies, there is a positive market reaction to the first public announcement of these purchases. In the long-run, raiders earn an abnormal profit when they sell their stakes. When they still held their positions at the end of the sample period, abnormal returns were insignificant. Raiders' activities do not improve operating performance. The findings are consistent with superior stock picking ability among these investors, but do not support the hypothesis that raiders are governance champions.