Abstract
In this study, we examine the intra-industry effect of proxy contests. Proxy contests convey the information of common industrial risks or expected competitive relationship change. We find significant negative abnormal returns in the group of competitors of target firms with negative abnormal returns, and such negative abnormal returns become larger for similar-size competitors. In contrast, there are no significant abnormal returns for competitors of target firms with positive abnormal returns. These findings are consistent with the information-based theory but not the competitive theory.
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Notes
Consistent with Mulherin and Poulsen (1998), we use the equally-weighted CRSP market index. However, we get qualitatively similar results using the value-weighted CRSP market index for value-weighted firm portfolio. These results are available upon request.
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Chen, F., Huang, J. & Yu, H. The intra-industry effects of proxy contests. J Econ Finan 44, 321–347 (2020). https://doi.org/10.1007/s12197-019-09492-6
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DOI: https://doi.org/10.1007/s12197-019-09492-6