The Rise and Fall (?) of Shareholder Activism by Hedge Funds

Posted: 6 Jan 2012 Last revised: 7 Jan 2012

Brian R. Cheffins

University of Cambridge - Faculty of Law; European Corporate Governance Institute (ECGI)

John Armour

University of Oxford - Faculty of Law; University of Oxford - Said Business School; European Corporate Governance Institute (ECGI)

Multiple version iconThere are 2 versions of this paper

Date Written: January 6, 2012

Abstract

Shareholder activism by hedge funds became a major corporate governance phenomenon in the United States in the 2000s. This paper puts the trend into context by introducing a heuristic device referred to as 'the market for corporate influence' to distinguish the ex ante-oriented 'offensive' brand of activism hedge funds engage in from the ex post-oriented 'defensive' activism carried out by mutual funds and pension funds. The paper traces the rise of hedge fund activism and anticipates future developments, arguing in so doing that, despite the blow the 2008 financial crisis dealt to hedge funds, their interventions will remain an important element of U.S. corporate governance going forward.

This article is an updated synthesis for a non-legal audience of http://ssrn.com/abstract=1489336

Keywords: shareholder activism, hedge funds, financial crisis

JEL Classification: G34, G38, K22, N22

Suggested Citation

Cheffins, Brian R. and Armour, John, The Rise and Fall (?) of Shareholder Activism by Hedge Funds (January 6, 2012). Journal of Alternative Investments, Vol. 14, No. 3, 2012. Available at SSRN: https://ssrn.com/abstract=1980593

Brian R. Cheffins (Contact Author)

University of Cambridge - Faculty of Law ( email )

10 West Road
Cambridge, CB3 9DZ
United Kingdom
+44 1223 330084 (Phone)
+44 1223 330055 (Fax)

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

John Armour

University of Oxford - Faculty of Law ( email )

Oriel College
Oxford, OX1 4EW
United Kingdom
+44 1865 286544 (Phone)

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

European Corporate Governance Institute (ECGI) ( email )

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

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