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File name: SSRN-id948907. ; Size: 206K
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Hedge Fund Activism, Corporate Governance, and Firm Performance
Alon P. Brav
Duke University - Fuqua School of Business
Wei Jiang
Columbia Business School - Finance and Economics
Randall S. Thomas
Vanderbilt University - Law School; European Corporate Governance Institute (ECGI)
Frank Partnoy
University of San Diego School of Law
May 2008
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.
Number of Pages in PDF File: 56
Keywords: Hedge Fund, Activism, Governance
JEL Classification: G14, G23, G3
Accepted Paper Series
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Date posted: April 5, 2007
Suggested CitationBrav, Alon P., Jiang, Wei, Thomas, Randall S. and Partnoy, Frank, Hedge Fund Activism, Corporate Governance, and Firm Performance (May 2008). 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. Available at SSRN: http://ssrn.com/abstract=948907
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