Discussion Paper Details
Please find the details for DP11471 in an easy to copy and paste format below:
Title: Who is afraid of BlackRock?
Author(s): Massimo Massa, David Schumacher and Yan Wang
Publication Date: August 2016
Keyword(s): Asset Management Merger, Limits to Arbitrage, liquidity and Strategic Interactions
Programme Area(s): Financial Economics
Abstract: We use the merger of BlackRock with Barclays Global Investors to study how changes in ownership concentration affect the investment behavior of financial institutions and the cross-section of stocks worldwide. We find that other institutions begin avoiding stocks that experience a merger-related increase in ownership concentration. As a result, affected stocks experience a permanent and negative price, liquidity and volatility impact. We confirm these effects in a large sample of asset management mergers over a ten year period. The interpretation that institutions strategically avoid stocks with an elevated risk of future fragility enjoys the strongest support in the data.
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Massa, M, Schumacher, D and Wang, Y. 2016. 'Who is afraid of BlackRock?'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=11471