Wolf Pack Activism

54 Pages Posted: 23 Nov 2014 Last revised: 1 Aug 2019

See all articles by Alon Brav

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: May 1, 2019


Blockholder monitoring is central 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. We present a model in which one or more sizeable lead activists implicitly coordinate with many smaller followers in engaging target management. Our model formalizes a key source of complementarity across the engagement strategies of institutional blockholders, arising from their motivation to attract investment flows, which overcomes free riding even for small blockholders and enables coordinated engagement. We also endogenize ownership changes in anticipation of activism campaigns.

Keywords: corporate governance; blockholder monitoring; institutional investors; reputation concerns; strategic complementarity

JEL Classification: G34, G23

Suggested Citation

Brav, Alon and Dasgupta, Amil and Mathews, Richmond D., Wolf Pack Activism (May 1, 2019). Robert H. Smith School Research Paper No. RHS 2529230; European Corporate Governance Institute (ECGI) - Finance Working Paper No. 501/2017. 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)

United Kingdom

European Corporate Governance Institute (ECGI) ( email )

B-1050 Brussels

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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