Wei Jiang

Activist arbitrage: A study of open-ending attempts of closed-end funds

Coauthor(s): Michael Bradley, Alon Brav, Itay Goldstein.

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Abstract:

This paper documents frequent attempts by activist arbitrageurs to open-end discounted closed-end funds, particularly after the 1992 proxy reform which reduced the costs of communication among shareholders. Open-ending attempts have a substantial effect on discounts, reducing them, on average, to half of their original level. The size of the discount is a major determinant of whether a fund gets attacked. Other important factors include the costs of communication among shareholders and the governance structure of the targeted fund. Our study contributes to the understanding of the actions undertaken by arbitrageurs in financial markets beyond just pure trading.

The PDF above is a preprint version of the article. The final version may be found at < http://dx.doi.org/10.1016/j.jfineco.2009.01.005 >.

Source: Journal of Financial Economics
Exact Citation:
Bradley, Michael, Alon Brav, Itay Goldstein, and Wei Jiang. "Activist arbitrage: A study of open-ending attempts of closed-end funds." Journal of Financial Economics 95, no. 1 (2010): 1-19.
Volume: 95
Number: 1
Pages: 1-19
Date: 1 2010