Corporate Control Activism

45 Pages Posted: 30 Apr 2015 Last revised: 24 Aug 2018

See all articles by Adrian Aycan Corum

Adrian Aycan Corum

Cornell University - Samuel Curtis Johnson Graduate School of Management

Doron Levit

University of Washington, Foster School of Business; European Corporate Governance Institute (ECGI)

Date Written: June 11, 2018

Abstract

This paper studies the role of activist investors in the M&A market. Our theory proposes that activist investors have an inherent advantage relative to bidders in pressuring entrenched incumbents to sell. As counterparties to the acquisition, bidders have a fundamental conflict of interests with target shareholders from which activist investors are immune. Therefore, unlike activists, the ability of bidders to win proxy fights is very limited. This result is consistent with the large number of activist campaigns that have resulted with the target's sale to a third party and the evidence that most proxy fights are launched by activists, not by bidders.

Keywords: Acquisition, Corporate Governance, Proxy Fight, Shareholder Activism, Takeover

JEL Classification: D74, D83, G23, G32, G34

Suggested Citation

Corum, Adrian Aycan and Levit, Doron, Corporate Control Activism (June 11, 2018). Journal of Financial Economics (JFE), Forthcoming, Available at SSRN: https://ssrn.com/abstract=2600340 or http://dx.doi.org/10.2139/ssrn.2600340

Adrian Aycan Corum

Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )

437 Sage Hall
114 East Ave.
Ithaca, NY 14853
United States

HOME PAGE: http://https://www.johnson.cornell.edu/faculty-and-research/faculty/aac256

Doron Levit (Contact Author)

University of Washington, Foster School of Business ( email )

434 Paccar Hall, 4273 E Stevens Way NE
Seattle, WA 98195
United States

HOME PAGE: http://https://sites.google.com/view/doronlevit

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

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