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The Deconstruction of Equity
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The Deconstruction of Equity: Activist Shareholders, Decoupled Risk, and Corporate Governance

Wolf-Georg Ringe

Abstract

Activist shareholders, hedge funds, and other sophisticated players in the capital markets increasingly engage in ‘risk-decoupling’, a strategy referring to the unbundling of the formal shareholder position and its inherent economic risk. Using a range of techniques, investors engage in positive risk-decoupling strategies—essentially, the creation of a long economic position without formally owning the shares—and negative risk-decoupling—the creation of a short position alongside long equity exposure. These strategies are also referred to as ‘hidden ownership’ and ‘empty voting’, respectively. ... More

Keywords: risk-decoupling, shareholder activism, hedge funds, hidden ownership, empty voting, takeovers, corporate governance, securities law, derivatives, share lending

Bibliographic Information

Print publication date: 2016 Print ISBN-13: 9780198723035
Published to Oxford Scholarship Online: June 2016 DOI:10.1093/acprof:oso/9780198723035.001.0001

Authors

Affiliations are at time of print publication.

Wolf-Georg Ringe, author
Professor of International Commercial Law, Copenhagen Business School & University of Oxford