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

44 Pages Posted: 1 Jun 2020 Last revised: 13 Jul 2020

See all articles by Ryan Flugum

Ryan Flugum

University of Northern Iowa

Choonsik Lee

University of Rhode Island

Matthew E. Souther

University of South Carolina - Darla Moore School of Business

Date Written: May 28, 2020

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

Suggested Citation

Flugum, Ryan and Lee, Choonsik and Souther, Matthew, Shining a Light in a Dark Corner: EDGAR Search Activity Reveals the Strategically Leaked Plans of Activist Investors (May 28, 2020). Available at SSRN: https://ssrn.com/abstract=3612507 or http://dx.doi.org/10.2139/ssrn.3612507

Ryan Flugum

University of Northern Iowa ( email )

College of Business Administration
CBB 303
Cedar Falls, IA 50614
United States
3192732976 (Phone)

Choonsik Lee (Contact Author)

University of Rhode Island ( email )

Ballentine Hall
7 Lippitt Road
Kingston, RI 02881
United States

HOME PAGE: http://sites.google.com/site/choonsiklee79/

Matthew Souther

University of South Carolina - Darla Moore School of Business ( email )

1705 College St
Francis M. Hipp Building
Columbia, SC 29208
United States

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