Stocks expected to be sold by distressed mega hedge funds (MHFs) face anticipatory institutional selling and increased short interest. However, no evidence of anticipatory trading is found in stocks held by nondistressed MHFs, distressed non-MHFs, or stocks confidentially held by distressed MHFs, suggesting that public portfolio disclosure by large and closely followed distressed investors, and not common investment signals, drives anticipatory trading. Distressed MHFs with greater exposure to such anticipatory trading suffer 2.21% lower style-adjusted returns. Stocks subject to anticipatory trading experience negative abnormal returns followed by reversals, indicating the price destabilizing effect of anticipatory trading.

We examine the adoption rates of responsible investment (RI) policies among university endowments. Adoption rates are higher among universities that face stakeholder pressure and are donation-dependent. Policy adoption predicts greater abnormal donations totaling 12 % of endowment assets, especially from “socially conscious” donors and during periods of higher media attention to climate change. Universities also experience greater student applications following adoptions. RI endowments have greater management costs, greater return volatility, and similar overall asset growth (donations plus net-of-cost investment income) compared to non-RI endowments. We conclude that RI policies are an important part of the optimal contract between universities and their stakeholders.