Voluntary Disclosures by Activist Shareholders

45 Pages Posted: 10 Mar 2018 Last revised: 4 Oct 2018

Ryan McDonough

Rutgers Business School - Newark & New Brunswick

Jordan Schoenfeld

Georgetown University, McDonough School of Business

Date Written: October 3, 2018

Abstract

Using hand-collected data, we find that activist shareholders often publicly disclose open letters that demand various changes in corporate operating decisions at their target firms. These letters are associated with significant stock price movements, decreased bid-ask spreads, and key activism outcomes such as directorship wins, corporate strategy shifts, and proxy advisor recommendations. Managers commonly respond to activists' open letters with their own voluntary disclosures. We conclude that activists use voluntary disclosure to mitigate investor information asymmetry and that managers' voluntary disclosures can be induced by activists.

Keywords: Information Asymmetry; Shareholder Activism; Voluntary Disclosure

JEL Classification: D21, G30, G32, G34, K22, L22

Suggested Citation

McDonough, Ryan and Schoenfeld, Jordan, Voluntary Disclosures by Activist Shareholders (October 3, 2018). Georgetown McDonough School of Business Research Paper No. 3137216. Available at SSRN: https://ssrn.com/abstract=3137216 or http://dx.doi.org/10.2139/ssrn.3137216

Ryan McDonough

Rutgers Business School - Newark & New Brunswick ( email )

100 Rockafeller Road
Piscataway, NJ 08854-8054
United States

Jordan Schoenfeld (Contact Author)

Georgetown University, McDonough School of Business ( email )

3700 O Street, NW
Washington, DC 20057
United States

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