Hedge funds and the market return

This paper investigates if the equity stake, along with hedge funds, generates value for target companies in highly concentrated markets, such as Brazilian one. In a sample 324 listed São Paulo Stock Market (B3) that are actively participating Anbima Hedge Fund Index (IHFA), between 2007 and 2016, we found stake of funds invested companies, despite market being more concentrated. We capture fund effect on terms of: (i) how much firms’ capitalization is maintained by its percentage change t t-1; (ii) many invest determined company each period t-1. defined firm creation using two proxies: abnormal return effective stock return. To derive our results, performed linear regressions funds’ fixed effects set characteristics acting controls. positive significant relationship generation Our results suggest activism increasing Brazil, managers influencing decisions corporate governance mechanisms.