Hedge Fund Activism: Does it Still Work? The Case of Atos Origin.
35 Pages Posted: 6 Apr 2009
Date Written: April 2009
Manuscript Type: Empirical - Clinical study
Research Question/Issue: This article investigates the ability of two hedge funds, Centaurus and Pardus, to successfully act as activists in one of their targets, Atos Origin.
Research Findings/Insights: This paper provides a clinical study analysing how and why two hedge funds failed in the activist battle against the French IT company Atos Origin from October 2006 to May 2008. This case study provides a detailed analysis of the actions of both parties during the whole activism process. We present evidence of hedge funds difficulties in defining target corporate strategy and in facing target resistance.
Theoretical/Academic Implications: Unlike cross-sectional studies, the clinical case shows how a hedge fund manages its position in a target company, and analyses skills and limits of hedge fund activism, particularly in defining corporate strategy.
Practitioner/Policy Implications: The results provide support for important legal and contextual factors in activism success. The French law provides little protection for shareholders while political standards and public opinion are to the advantage of employees rather than to shareholders, which provides legitimacy for managerial resistance to activism.
Keywords: Corporate Governance, Activism, Hedge Funds, Corporate Defences
JEL Classification: G34, G32
Suggested Citation: Suggested Citation