Quasi-Insider Shareholder Activism: Corporate Governance at the Periphery of Control
48 Pages Posted: 4 Apr 2017 Last revised: 10 Jul 2022
Date Written: July 11, 2022
We analyze shareholder activism by "quasi-insiders" - founders, former executives, and other individuals tangentially connected to a firm. These individuals seek control in their campaigns, use aggressive tactics, and target smaller, poorly-performing firms. Their campaigns are associated with positive announcement returns but declines in profitability in the near future. Former CEOs who engage in campaigns often left the target under negative circumstances and launch their campaigns soon after departure. Our results suggest that insiders at the periphery of control may intervene in firms too small for traditional activists to target, but evidence that their activities increase shareholder value is mixed.
Keywords: Shareholder Activism, Corporate Governance, Insiders, Hedge Funds, Institutional Investors
JEL Classification: G23, G30, G32, G34
Suggested Citation: Suggested Citation