Managerial Activism

Abstract

We look at managerial activism through collective action in the corporate sector. Activist managers spend considerable resources on lobbying, lawsuits and public statements to pursue pro-business as well as pro-manager issues. While managerial activism is valuable in following pro-business policies and strategies, pro-manager agendas may exacerbate agency problems. We find evidence more towards the pro-business role of managerial activism. Specifically, firm performance improves with managerial activism, and this improvement is observed primarily in firms that are government dependent, produce differentiated products, operate in concentrated industries or have more intangible assets. While corporate governance and corporate social responsibility of firms with activist managers is mostly comparable to other firms, firms with activist managers have better diversity in their workforce and boards. Overall, managerial activism adds value to firms, especially when information dissemination is more essential due to firm characteristics.

Keywords: Corporate Governance, Managerial Activism, CEO Compensation, Firm Performance, Corporate Social Responsibility

JEL Classification: G14, G18, G34, G38, D7