Shining a Light in a Dark Corner: EDGAR Search Activity Reveals the Strategically Leaked Plans of Activist Investors

Abstract

We document a network of information flow between activists and other investors prior to the announcement of a campaign. We use EDGAR search activity matched to institutional investor IP addresses to identify investors who persistently download information on an individual activist’s campaign targets in the days prior to that activist’s 13D disclosures. This informed EDGAR access suggests leaked information from the activist to the unaffiliated investor, who is unnamed in the 13D. The presence of these informed investors is associated with higher pre-13D turnover, higher post-13D returns, and an increased likelihood of the activist pursuing and winning a proxy fight.

Keywords: Activist campaigns, Investor coordination, Investor search activity, Proxy fights

JEL Classification: G14, G30, G34, G38