Does familiarity breed activism? Geography and hedge fund activism
研究发现对冲基金更倾向于投资距离其总部较近的公司，但这类投资的回报反而更低，这不能用成本或目标选择解释，而是源于基金经理的熟悉性偏差。
I study the role of geographical proximity in hedge fund activism and find that activist hedge funds are more likely to target firms located closer to their headquarters. Despite this proximity preference, activism returns are lower for nearer targets. Alternative factors, including lower activism costs, target selection effects, and reduced employee wealth transfers at nearby firms do not explain lower returns to proximate targets. Instead, results are consistent with familiarity bias in hedge fund targeting decisions. Additional tests focusing on small targets, openly confrontational campaigns, and passive investments reinforce this behavioral explanation. • This paper studies the role of geographical proximity in hedge fund activism. • Results show that activist hedge funds are more likely to target firms located closer to their headquarters. • Despite this proximity preference, activism returns are lower for nearer targets. • Other factors do not explain lower returns to closer targets but results support familiarity bias in hedge fund targeting. • Additional tests focusing on small targets, hostile activism, and passive investments buttress this behavioral explanation.