Working paper

Activism Waves and the Market for Corporate Assets

Ulrich Hege, and Yifei Zhang


We show that the majority of hedge fund activism campaigns occur in clusters by industry and time. Activism waves are explained by poor and deteriorating industry conditions and magnified by the herd behavior of inexperienced funds, but they are not driven by asset liquidity. Activism waves lead to a large increase in the threat to become an activism target. They strongly impact the market for corporate assets as targets as well as peer firms receive more merger bids, increase divestitures and make fewer acquisitions. We estimate that the simultaneous increase in asset sales and decrease in acquisitions in activism waves reduce real asset liquidity for asset sellers by about 35%. The liquidity squeeze produces two effects: transaction prices are reduced, and industry outsiders provide liquidity by purchasing more industry assets. Looking at short-term price pressure and long-run performance, we present evidence that transactions by activist targets are less affected by the reduced asset liquidity than those of other firms.


activism waves; hedge fund activism; real asset liquidity; fire sales; divestitures; mergers; acquisitions; small acquirers.;

JEL codes

  • G23: Non-bank Financial Institutions • Financial Instruments • Institutional Investors
  • G34: Mergers • Acquisitions • Restructuring • Corporate Governance


Ulrich Hege, and Yifei Zhang, Activism Waves and the Market for Corporate Assets, TSE Working Paper, n. 22-1397, December 2022.

See also

Published in

TSE Working Paper, n. 22-1397, December 2022