The beneficial ownership report : stock returns and shareholder activism

Abstract

In this thesis we study the association between large investors that file SC 13D forms and stock returns. We analyse shareholder activism by studying Schedule 13D filings and differentiate between active and passive investors through the intentions disclosed in Item 4. The results of this thesis indicate that disclosures made by large shareholders are associated with positive abnormal returns for the subject firm in the period prior to the filing date. This paper finds that firms with shareholders that reveal intentions of activism are related to significant and positive cumulative abnormal returns (CAR). Firms that have investors disclosing passive intentions are also associated with significant and positive CAR, yet only in the periods after the median event date. We also find that firms with an active SC 13D filing experience significantly higher CAR than those that are passive.