Introduction to Institutional Investor Activism: Hedge Funds and Private Equity, Economics and Regulation

Institutional Investor Activism: Hedge Funds and Private Equity, Economics and Regulation (William W. Bratton and Joseph A. McCahery eds., Oxford University Press, 2015)

U of Penn, Inst for Law & Econ Research Paper No. 16-12

49 Pages Posted: 28 May 2016

See all articles by William W. Bratton

William W. Bratton

University of Pennsylvania Carey Law School; University of Miami School of Law; European Corporate Governance Institute (ECGI)

Joseph A. McCahery

Tilburg University - School of Law; European Banking Center (EBC); Tilburg Law and Economics Center (TILEC); European Corporate Governance Institute (ECGI)

Date Written: 2015

Abstract

The increase in institutional ownership of recent decades has been accompanied by an enhanced role played by institutions in monitoring companies’ corporate governance behaviour. Activist hedge funds and private equity firms have achieved a degree of success in actively shaping the business plans of target firms. They may be characterized as pursuing a common goal – in the words used in the OECD Steering Group on Corporate Governance, both seek ‘to increase the market value of their pooled capital through active engagement with individual public companies. This engagement may include demands for changes in management, the composition of the board, dividend policies, company strategy, company capital structure and acquisition/disposal plans which are normally regarded as governance issues.’ This article is the introductory chapter of Institutional Investor Activism: Hedge Funds and Private Equity, Economics and Regulation (Oxford University Press 2015). The book collects descriptive expositions and empirical analyses essential for an understanding of both varieties of interventionist shareholder. The twenty-one chapters detail these investors’ strategic approaches, the financial returns they produce, the regulatory context in which they operate, and the policy questions raised by their activities.

Keywords: Law and economics, corporate governance and control, securities law and regulation, institutional investors, shareholder activism, European Union, firm financial performance, mergers and acquisitions, M&A, bankruptcy, takeovers

JEL Classification: G32, K22, L21

Suggested Citation

Bratton, William Wilson and McCahery, Joseph A., Introduction to Institutional Investor Activism: Hedge Funds and Private Equity, Economics and Regulation (2015). Institutional Investor Activism: Hedge Funds and Private Equity, Economics and Regulation (William W. Bratton and Joseph A. McCahery eds., Oxford University Press, 2015), U of Penn, Inst for Law & Econ Research Paper No. 16-12, Available at SSRN: https://ssrn.com/abstract=2785587

William Wilson Bratton (Contact Author)

University of Pennsylvania Carey Law School ( email )

3501 Sansom Street
Philadelphia, PA 19104
United States

University of Miami School of Law ( email )

P.O. Box 248087
Coral Gables, FL 33146
United States

European Corporate Governance Institute (ECGI) ( email )

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

HOME PAGE: http://www.ecgi.org

Joseph A. McCahery

Tilburg University - School of Law; European Banking Center (EBC) ( email )

Warandelaan 2
Tilburg, 5000 LE
Netherlands
+31-(0)13-466-2306 (Phone)
+31-(0)13-466-2323 (Fax)

Tilburg Law and Economics Center (TILEC)

Warandelaan 2
Tilburg, 5000 LE
Netherlands

European Corporate Governance Institute (ECGI)

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

HOME PAGE: http://www.ecgi.org

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