Catching the Conscience of Kings: How Activists Align with Mutual Funds

60 Pages Posted: 29 Dec 2020 Last revised: 7 Sep 2021

See all articles by Manish Jha

Manish Jha

Georgia State University - Department of Finance

Date Written: October 26, 2020

Abstract

Do hedge fund activists tailor their campaigns to mutual fund family's preferences? And if so, does the strategy work? Using supervised machine learning on the fund family's proxy voting choices, I estimate their preferences. I find that activists align proxy communications with the preferences of fund families that own a larger share in targeted firms. Activists learn from interactions with fund families and align their campaigns better in subsequent proxy fights. Tailored campaigns enjoy improved shareholder attention, more votes, and a greater likelihood of success. My findings suggest that activism helps push shareholders' implicit agendas.

Keywords: Hedge Fund Activism, Shareholder Preferences, Text Analysis, Machine Learning

JEL Classification: G23, G32, G34

Suggested Citation

Jha, Manish, Catching the Conscience of Kings: How Activists Align with Mutual Funds (October 26, 2020). Available at SSRN: https://ssrn.com/abstract=3719565 or http://dx.doi.org/10.2139/ssrn.3719565

Manish Jha (Contact Author)

Georgia State University - Department of Finance ( email )

University Plaza
Atlanta, GA 30303-3083
United States
3142508129 (Phone)

HOME PAGE: http://mjha91.github.io

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