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Blockholder Disclosure Thresholds and Hedge Fund Activism

Published online by Cambridge University Press:  31 January 2022

Guillem Ordóñez-Calafi*
University of Bristol School of Accounting and Finance
Dan Bernhardt
University of Illinois Urbana-Champaign Department of Economics and University of Warwick Department of
* (corresponding author)
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Blockholder disclosure thresholds shape incentives for hedge fund activism, which are jointly determined with real investment and managerial behavior. Uninformed investors value lower thresholds (greater transparency) when the cost of trading against an informed activist outweighs the benefits of the activist’s disciplining of management. Conversely, activists may desire disclosure thresholds if the threat of their participation discourages managerial malfeasance, which is their source of profits. Hedge fund activism can be excessive: If market opacity sufficiently harms uninformed investors, the costs of reduced real investment outweigh the social benefits from managerial disciplining, and society benefits from lower thresholds.

Research Article
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This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (, which permits unrestricted re-use, distribution and reproduction, provided the original article is properly cited.
© The Author(s), 2022. Published by Cambridge University Press on behalf of the Michael G. Foster School of Business, University of Washington


We thank an anonymous referee, Marc Arnold, Pablo Beker, Costas Cavounidis, Dragana Cvijanović, Amil Dasgupta, Tao Li, Herakles Polemarchakis, Debraj Ray, Gunter Strobl, John Thanassoulis, Cristian Tiu, Giulio Trigilia, Rong Wang, Jing Zeng, and participants at various seminars and conferences for helpful comments and discussions.


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