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Hedge Fund Activism, Corporate Governance, and Firm Performance
Alon Brav Duke University - Fuqua School of Business Wei Jiang Columbia Business School - Finance and Economics Division Randall S. Thomas Vanderbilt University - School of Law Frank Partnoy University of San Diego - School of Law Journal of Finance, Vol. 63, p. 1729, 2008 ECGI - Finance Working Paper No. 139/2006 Vanderbilt Law and Economics Research Paper No. 07-28 FDIC Center for Financial Research Working Paper No. 2008-06 Abstract: Using a large hand-collected dataset from 2001 to 2006, we find that activist hedge funds in the U.S. propose strategic, operational, and financial remedies and attain success or partial success in two thirds of the cases. Hedge funds seldom seek control and in most cases are nonconfrontational. The abnormal return around the announcement of activism is approximately 7%, with no reversal during the subsequent year. Target firms experience increases in payout, operating performance, and higher CEO turnover after activism. Our analysis provides important new evidence on the mechanisms and effects of informed shareholder monitoring.
Keywords: Hedge Fund, Activism, Governance JEL Classifications: G14, G23, G3 Accepted Paper SeriesDate posted: April 05, 2007 ; Last revised: June 12, 2009Suggested CitationContact Information
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