Hostile Activism: Hostile Tactics or Hostile Hedge Funds?

32 Pages Posted: 11 Apr 2017 Last revised: 26 Mar 2019

See all articles by Hugo Benedetti

Hugo Benedetti

ESE Business School - Universidad de los Andes

Date Written: August 14, 2017


I examine reputation building by activist hedge funds and document three new findings with regard to hostile activism. First, there is evidence of a permanent reputation effect to hostile activism. Activist hedge funds that have engaged in hostile tactics, receive on average a 3% higher CAR [-10, 10] on their subsequent non-hostile campaigns, compared to hedge funds that have never engaged in hostile tactics. Second, I find that this abnormal return is positively related to the level of hostile reputation of the campaigning hedge fund (measured by the total and relative frequency of past hostile campaigns). Lastly, I find that activist hedge funds with more hostile reputation modify their non-hostile activism style to engage “hostile-like” targets and pursue “hostile-like” objectives, but withhold the use of hostile tactics. I find that in those non-hostile campaigns, hostile-style activists receive a higher announcement period abnormal return that is not explained by target characteristics, hedge fund characteristics, campaigns characteristics or time specific events.

Keywords: Hedge Fund Activism, Hostile Activism, Activist Hedge Fund Returns, Hostile Reputation

JEL Classification: G12, G13

Suggested Citation

Benedetti, Hugo E, Hostile Activism: Hostile Tactics or Hostile Hedge Funds? (August 14, 2017). Available at SSRN: or

Hugo E Benedetti (Contact Author)

ESE Business School - Universidad de los Andes ( email )

Av. La Plaza 1905
San Carlos de Apoquindo, Las Condes

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