London Business School - Institute of Finance and Accounting; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)
Bocconi University; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)
Date Written: August 2009
Abstract
This article reports a unique analysis of private engagements by an activist fund. It is based on data made available to us by Hermes, the fund manager owned by the British Telecom Pension Scheme, on engagements with management in companies targeted by its UK Focus Fund. In contrast with most previous studies of activism, we report that the fund executes shareholder activism predominantly through private interventions that would be unobservable in studies purely relying on public information. The fund substantially outperforms benchmarks and we estimate that abnormal returns are largely associated with engagements rather than stock picking.
Becht, Marco and Franks, Julian R. and Mayer, Colin and Rossi, Stefano, Returns to Shareholder Activism: Evidence from a Clinical Study of the Hermes UK Focus Fund (August 2009). The Review of Financial Studies, Vol. 22, Issue 8, pp. 3093-3129, 2009, Available at SSRN: https://ssrn.com/abstract=1443052 or http://dx.doi.org/hhn054