Quasi-Insider Shareholder Activism: Corporate Governance at the Periphery of Control
45 Pages Posted: 4 Apr 2017 Last revised: 22 May 2019
Date Written: May 20, 2019
We document the role of investors at the periphery of control - "quasi-insiders" - in corporate governance. These agents, who include founders, former CEOs, and other former officers, launch activist campaigns in smaller and worse-performing firms than traditional hedge fund activists, and use aggressive tactics to seek greater control. Their campaigns are associated with positive abnormal returns larger than those in hedge fund campaigns and subsequent improvements in operating performance. The presence of a quasi-insider as a blockholder is associated with a significant increase in CEO turnover-performance sensitivity. Overall, our results suggest that quasi-insiders play a meaningful role in governance.
Keywords: Shareholder Activism, Corporate Governance, Insiders, Hedge Funds, Institutional Investors
JEL Classification: G23, G30, G32, G34
Suggested Citation: Suggested Citation