Crypto funds are a new financial intermediary that trade in cryptographically protected digital assets, known as coins or tokens. Both the number of crypto funds and investments in crypto funds are soaring. As of the second quarter of 2021, more than 800 crypto funds are active, and their aggregate assets under management exceed $60 billion. The trend is likely to continue, as crypto funds returned an average of 98 percent (before fees) to their investors in the first quarter of 2021.
A vast literature studies the effects of antitakeover provisions (ATPs) on firm value. The academic consensus is that ATPs harm firm value because they partly insulate managers from the threat of takeover, and that view has become very influential. Prominent studies find that empire building through corporate acquisitions is the main channel of value destruction by entrenched managers (Masulis, Wang, and Xie, 2007; Harford, Humphery-Jenner, and Powell, 2012). Managers protected by ATPs are more likely to pursue self-interested deals that further increase their entrenchment, which harms shareholder value. A major limitation of the existing empirical studies is their reliance on … Read more