Pre-Disclosure Accumulations by Activist Investors: Evidence and PolicyCoauthor(s): Lucian Bebchuk, Alon Brav, Robert Jackson, Jr..
The SEC is currently considering a rulemaking petition requesting that the Commission shorten the ten-day window, established by Section 13(d) of the Williams Act, within which investors must publicly disclose purchases of a 5% or greater stake in public companies. In this Article, we provide the first systematic empirical evidence on these disclosures and find that several of the petition's factual premises are not consistent with the evidence.
Our analysis is based on about 2,000 filings by activist hedge funds during the period of 1994–2007. We find that the data are inconsistent with the petition's key claim that changes in market practices and technologies have operated over time to increase the magnitude of pre-disclosure accumulations, making existing rules "obsolete" and therefore requiring the petition's proposed "modernization." The median stake that these investors disclose in their 13(d) filings has remained stable throughout the 17-year period that we study, and regression analysis does not identify a trend over time of changes in the stake disclosed by investors. We also find that:
Source: The Journal of Corporation Law
Bebchuk, Lucian, Alon Brav, Robert Jackson, Jr., and Wei Jiang. "Pre-Disclosure Accumulations by Activist Investors: Evidence and Policy." The Journal of Corporation Law 39, no. 1 (Fall 2013): 1-34.
Date: Fall 2013