Quasi-Insider Shareholder Activism: Corporate Governance at the Periphery of Control

48 Pages Posted: 4 Apr 2017 Last revised: 10 Jul 2022

See all articles by Jonathan B. Cohn

Jonathan B. Cohn

University of Texas at Austin

Mitch Towner

University of Arizona - Department of Finance

Aazam Virani

University of Arizona - Department of Finance

Date Written: July 11, 2022

Abstract

We analyze shareholder activism by "quasi-insiders" - founders, former executives, and other individuals tangentially connected to a firm. These individuals seek control in their campaigns, use aggressive tactics, and target smaller, poorly-performing firms. Their campaigns are associated with positive announcement returns but declines in profitability in the near future. Former CEOs who engage in campaigns often left the target under negative circumstances and launch their campaigns soon after departure. Our results suggest that insiders at the periphery of control may intervene in firms too small for traditional activists to target, but evidence that their activities increase shareholder value is mixed.

Keywords: Shareholder Activism, Corporate Governance, Insiders, Hedge Funds, Institutional Investors

JEL Classification: G23, G30, G32, G34

Suggested Citation

Cohn, Jonathan B. and Towner, Mitch and Virani, Aazam, Quasi-Insider Shareholder Activism: Corporate Governance at the Periphery of Control (July 11, 2022). Available at SSRN: https://ssrn.com/abstract=2945613 or http://dx.doi.org/10.2139/ssrn.2945613

Jonathan B. Cohn

University of Texas at Austin ( email )

Red McCombs School of Business
Austin, TX 78712
United States
512-232-6827 (Phone)

Mitch Towner (Contact Author)

University of Arizona - Department of Finance ( email )

1130 E. Helen Street
Office 315K
Tucson, AZ 85721-0108
United States

HOME PAGE: http://www.mitchtowner.com

Aazam Virani

University of Arizona - Department of Finance ( email )

McClelland Hall
Tucson, AZ 85721-0108
United States

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