Hijacking the Corporate Narrative: Activist Open Letters and Management Disclosures
Posted: 10 Mar 2018 Last revised: 20 Mar 2020
Date Written: March 19, 2020
Activist investors often release open letters that criticize a target's management and demand specific changes to corporate operations. Using hand-collected data, we find that these letters are significantly associated with stock price reactions, bid-ask spreads, and key corporate governance outcomes such as directorships, operational changes, and proxy advisor recommendations. We also find that these letters are associated with increased management disclosures. Overall, this study provides some of the first evidence on how shareholders use public disclosure for corporate governance purposes.
Keywords: Corporate Disclosure; Corporate Governance; Information Asymmetry; Investment Funds; Shareholder Activism
JEL Classification: D21, G30, G32, G34, K22, L22
Suggested Citation: Suggested Citation