Wolf Pack Activism

53 Pages Posted: 23 Nov 2014 Last revised: 23 Sep 2016

Alon Brav

Duke University - Fuqua School of Business

Amil Dasgupta

London School of Economics (LSE); Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

Richmond D. Mathews

University of Maryland - Department of Finance

Multiple version iconThere are 2 versions of this paper

Date Written: September 2016

Abstract

Blockholder monitoring is key to good corporate governance, but blockholders large enough to exercise significant unilateral influence are rare. As a result mechanisms that enable small blockholders to exert collective influence are important. It is alleged that institutional blockholders (implicitly) coordinate when intervening in firms, with one acting as the “lead” activist and others as peripheral activists, or “wolf pack” members. We present a model of wolf pack activism. Our model formalizes a source of complementarity across the engagement strategies of activists and highlights the catalytic role played by the leader. We also characterize share acquisition by wolf pack members and the leader, providing testable implications on ownership and price dynamics in wolf pack formation.

JEL Classification: G34

Suggested Citation

Brav, Alon and Dasgupta, Amil and Mathews, Richmond D., Wolf Pack Activism (September 2016). Robert H. Smith School Research Paper No. RHS 2529230. Available at SSRN: https://ssrn.com/abstract=2529230 or http://dx.doi.org/10.2139/ssrn.2529230

Alon Brav

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States
919-660-2908 (Phone)
919-684-2818 (Fax)

Amil Dasgupta (Contact Author)

London School of Economics (LSE) ( email )

Houghton Street
London WC2A 2AE
United Kingdom
+44 20 7955 7458 (Phone)
+44 20 7955 7420 (Fax)

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

European Corporate Governance Institute (ECGI) ( email )

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

Richmond D. Mathews

University of Maryland - Department of Finance ( email )

Robert H. Smith School of Business
Van Munching Hall
College Park, MD 20742
United States

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