Abstract

http://ssrn.com/abstract=948907
 
 

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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

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 Citation

Brav, Alon and Jiang, Wei and 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

Contact Information

Alon Brav (Contact Author)
Duke University - Fuqua School of Business ( email )
Box 90120
Durham, NC 27708-0120
United States
919-660-2908 (Phone)
919-684-2818 (Fax)
Wei Jiang
Columbia Business School - Finance and Economics ( email )
3022 Broadway
New York, NY 10027
United States
(212) 854-5553 (Phone)

Randall S. Thomas
Vanderbilt University - Law School ( email )
131 21st Avenue South
Nashville, TN 37203-1181
United States
European Corporate Governance Institute (ECGI)
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
Frank Partnoy
University of San Diego School of Law ( email )
5998 Alcala Park
San Diego, CA 92110-2492
United States
619-260-2352 (Phone)
619-260-4180 (Fax)
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