Quasi-Insider Shareholder Activism: Corporate Governance at the Periphery of Control
42 Pages Posted: 4 Apr 2017 Last revised: 2 Jul 2018
Date Written: December 1, 2017
We document the role of investors at the periphery of control within a firm – “quasi-insiders” - in shareholder activism. These agents, including founders and former executives, launch campaigns in smaller, worse-performing firms than traditional hedge fund activists, seek greater control, and employ more aggressive tactics. While they are less likely to achieve the stated objectives of their campaigns, these campaigns are associated with positive abnormal returns comparable to those in hedge fund campaigns and subsequent improvements in operating performance. Overall, our results suggest that quasi-insiders play an important and effective role as activists in firms that are less likely to be targeted by hedge funds.
Keywords: Shareholder Activism, Corporate Governance, Insiders, Hedge Funds, Institutional Investors
JEL Classification: G23, G30, G32, G34
Suggested Citation: Suggested Citation