Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments September 12, 2020 erstellt
Description:
Firms under the threat of hedge fund activism on average experience significant losses of outstanding bondholder wealth: bond yield and default probability rises while bond prices and ratings deteriorate. Under-threat firms receive inferior terms when initiating new loans. These observations are more prominent in firms with weaker creditor rights protection and firms that experience greater improvement in stock performance without accompanying real improvement. These findings are consistent with the manifestation of agency problems. Share repurchases funded by cash, asset sales and new debt issuance elevate share prices, which increases the cost of intervention for activists but jeopardizes the interest of existing bondholders