Wolf Pack Activism
59 Pages Posted: 23 Nov 2014 Last revised: 13 Apr 2017
Date Written: April 1, 2017
Blockholder monitoring is key to corporate governance, but blockholders large enough to exercise significant unilateral influence are rare. Mechanisms that enable small blockholders to exert collective influence are therefore important. It is alleged that institutional blockholders sometimes implicitly coordinate their interventions, with one acting as “lead” activist and others as periphera l”wolf pack” members. We present a model of wolf pack activism. Our model formalizes a key source of complementarity across the engagement strategies of activists and highlights the catalytic role played by the leader. We also characterize share acquisition in pack formation, providing testable implications on ownership and price dynamics.
Keywords: corporate governance; blockholder monitoring; institutional investors; reputation concerns; strategic complementarity
JEL Classification: G34, G23
Suggested Citation: Suggested Citation