Professor of Finance
JEL Classification: G11; G12; G14; G15; G23;
The authors exploit the merger between BlackRock and Barclays Global Investors to study how changes in expected ownership concentration affect the investment behavior of funds and the cross-section of stocks worldwide.The authors find that funds with open-end structures and large exposure to commonly held stocks begin avoiding these stocks following the merger announcement. This leads to a permanent change in the composition of institutional ownership and a negative price and liquidity impact.The authors confirm these results in a large sample of global asset management mergers. Their findings suggest that market participants behave strategically in response to changes in expected financial fragility.