Margin trading shareholder activists

Manuel Almagro and Jan-Oliver Strych

Applied Economics Letters, 2022, vol. 29, issue 5, 437-441

Abstract: We examine margin trading activists that we define as shareholders that are identified by Schedule 13D filings and state therein that they may use margin borrowings to finance their holdings. We find that arrivals of margin trading activists are associated with positive target announcement returns compared to those of non-margin trading activists. This indicates that margin trading activists’ arrivals are perceived as signals of positive future target firm performance. Moreover, we find that their investment horizon is likely contingent on how long they have invested in the targets prior to their filings or whether markets react positively to their arrivals.

Date: 2022
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DOI: 10.1080/13504851.2020.1869163

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