Warning message

CEPR.org and portal.cepr.org will be unavailable between 22:00-22:30 GMT on the 16th September 2019 due to maintenance.

DP11471 | Who is afraid of BlackRock?

Publication Date

08/29/2016

JEL Code(s)

Keyword(s)

Programme Area(s)

Abstract

We use the merger of BlackRock with Barclays Global Investors to study how changes in ownership concentration affect the investment behavior of financial institutions and the cross-section of stocks worldwide. We find that other institutions begin avoiding stocks that experience a merger-related increase in ownership concentration. As a result, affected stocks experience a permanent and negative price, liquidity and volatility impact. We confirm these effects in a large sample of asset management mergers over a ten year period. The interpretation that institutions strategically avoid stocks with an elevated risk of future fragility enjoys the strongest support in the data.