Quasi-Insider Shareholder Activism: Corporate Governance at the Periphery of Control

42 Pages Posted: 4 Apr 2017 Last revised: 2 Jul 2018

Jonathan B. Cohn

University of Texas at Austin

Mitch Towner

University of Arizona - Department of Finance

Aazam Virani

University of Arizona - Department of Finance

Date Written: December 1, 2017

Abstract

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

Cohn, Jonathan B. and Towner, Mitch and Virani, Aazam, Quasi-Insider Shareholder Activism: Corporate Governance at the Periphery of Control (December 1, 2017). Available at SSRN: https://ssrn.com/abstract=2945613 or http://dx.doi.org/10.2139/ssrn.2945613

Jonathan B. Cohn

University of Texas at Austin ( email )

Red McCombs School of Business
Austin, TX 78712
United States
512-232-6827 (Phone)

Mitch Towner (Contact Author)

University of Arizona - Department of Finance ( email )

1130 E. Helen Street
Office 315K
Tucson, AZ 85721-0108
United States

HOME PAGE: http://www.mitchtowner.com

Aazam Virani

University of Arizona - Department of Finance ( email )

McClelland Hall
Tucson, AZ 85721-0108
United States

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