2008 Volume 2008 Issue FIN-001 Pages 08-
I constructed the stock artificial market in order to analyze why an activist's announcement of the information that he holds over 5% of the firm's stock brings about rising of the stock price. I prepared two hypothesis. The first hypothesis is that the stock price rises because of speculators who consider the announcement to be the sign that the firm is undervalued. the second hypothesis is that investors expect jawboning rather than proxy contest. As a result, I found that the expectation for jawboning is much larger than proxy contest. Many investors regard the effect of jawboning as important.