Block Share Purchases and Corporate Performance
Jennifer E. Bethel, Julia Porter Liebeskind and Tim Opler
Journal of Finance 53, 605-634, 1998

Bethel, Liebeskind and Opler examine the relation between purchase of large share blocks and corporate performance. They find that activist investors acquiring large block shares typically target poor performing diversified firms. Increased divestitures, share repurchases and reduction in mergers and acquisitions follow such purchases. Activist block share purchases are also associated with improvements in profitability and shareholder value. They conclude that the “market for partial corporate control identifies and rectifies poor corporate performance.