Thirty Years of Shareholder Activism: A Survey of Empirical Research

20 Pages Posted: 20 May 2015 Last revised: 21 Jun 2017

See all articles by Matthew Denes

Matthew Denes

Carnegie Mellon University - Tepper School of Business

Jonathan M. Karpoff

University of Washington - Michael G. Foster School of Business

Victoria McWilliams

Villanova University

Date Written: June 8, 2016

Abstract

We summarize and synthesize the results from 73 studies that examine the consequences of shareholder activism for targeted firms, and draw two primary conclusions. First, activism that adopts some characteristics of corporate takeovers, especially significant stockholdings, is associated with improvements in share values and firm operations. Activism that is not associated with the formation of ownership blocks is associated with insignificant or very small changes in target firm value. Second, shareholder activism has become more value increasing over time. Research based on shareholder activism from the 1980s and 1990s generally finds few consequential effects, while activism in more recent years is more frequently associated with increased share values and operating performance. These results are consistent with Alchian and Demsetz’ (1972) argument that managerial agency problems are controlled in part by dynamic changes in ownership, and with Alchian’s (1950) observation that business practices adapt over time to mimic successful strategies.

Keywords: Shareholder activism, hedge fund activism

JEL Classification: G34, D23, L20

Suggested Citation

Denes, Matthew and Karpoff, Jonathan M. and McWilliams, Victoria, Thirty Years of Shareholder Activism: A Survey of Empirical Research (June 8, 2016). Journal of Corporate Finance, Vol. 44, June 2017, pp. 405-424. Available at SSRN: https://ssrn.com/abstract=2608085 or http://dx.doi.org/10.2139/ssrn.2608085

Matthew Denes

Carnegie Mellon University - Tepper School of Business ( email )

5000 Forbes Avenue
Pittsburgh, PA 15213-3890
United States

HOME PAGE: http://sites.google.com/site/matthewdenes

Jonathan M. Karpoff (Contact Author)

University of Washington - Michael G. Foster School of Business ( email )

Box 353226
Seattle, WA 98195-3200
United States
206-685-4954 (Phone)
206-221-6856 (Fax)

Victoria McWilliams

Villanova University ( email )

Department of Finance
800 Lancaster Ave.
Villanova, PA 19085
United States

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