Investor Activism and Takeovers

36 Pages Posted: 31 Jul 2007 Last revised: 22 Jan 2009

See all articles by Michael Schor

Michael Schor

Morgan Stanley

Robin M. Greenwood

Harvard Business School - Finance Unit; National Bureau of Economic Research (NBER)


Recent work documents large positive abnormal returns around the time that a hedge fund announces its activist intentions with a publicly listed firm. We show that these returns are largely explained by the ability of activists to force target firms into a takeover: In a comprehensive sample of 13D filings by portfolio investors between 1993 and 2006, we find that announcement returns and long-term abnormal returns are high for the subset of targets that are acquired ex-post, but not detectably different from zero for firms that remain independent eighteen months after the initial filing. We show that firms that are targeted by activists are more likely to get acquired than those in a control sample. Finally, we show that the portfolios managed by activist investors perform poorly during a period in which market-wide takeover interest declined.

Keywords: Corporate Governance, Hedge Funds, Takeovers, Mergers and Acquisitions

JEL Classification: G23, G34

Suggested Citation

Schor, Michael and Greenwood, Robin M., Investor Activism and Takeovers. Available at SSRN: or

Michael Schor

Morgan Stanley ( email )

New York, NY 10036
United States

Robin M. Greenwood (Contact Author)

Harvard Business School - Finance Unit ( email )

Boston, MA 02163
United States
617-495-6979 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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