Who is afraid of BlackRock?

Massimo Massa, David Schumacher and Yan Wang

No 11471, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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.

Keywords: Strategic interactions; Asset management merger; Liquidity; Limits to arbitrage (search for similar items in EconPapers)
JEL-codes: G11 G12 G14 G15 G23 (search for similar items in EconPapers)
Date: 2016-08
References: View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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