Importing Activists: Determinants and Consequences of Increased Cross-border Shareholder Activism

67 Pages Posted: 29 Dec 2020 Last revised: 21 Sep 2021

See all articles by Mark G. Maffett

Mark G. Maffett

University of Chicago - Booth School of Business

Anya Nakhmurina

Yale School of Management

Douglas J. Skinner

The University of Chicago - Booth School of Business

Date Written: September 20, 2021

Abstract

Shareholder activism is now an important global phenomenon. We use a sample of nearly 7,000 activist shareholder campaigns across 56 countries to address two principal research questions related to the rise of activism. First, we develop a measure of corporate governance regulation that captures the extent to which a country’s laws facilitate minority-shareholder engagement, a necessary condition for successful intervention, and show that our measure explains cross-country variation in the emergence of activism. Second, we exploit changes in these regulations to examine how an increase in the threat of activism affects corporate outcomes, both for targeted firms and for firms not explicitly targeted by activists. Our evidence suggests that regulatory changes that facilitate investor activism result in increased profitability, higher payouts, and reduced investments. These effects are concentrated in countries where the preexisting governance regulations are weaker and the pre-law-change level of activism was relatively low.

Keywords: Shareholder Activism, Corporate Governance, Regulation, Real Effects

JEL Classification: F55, G38, K22, M48

Suggested Citation

Maffett, Mark G. and Nakhmurina, Anya and Skinner, Douglas J., Importing Activists: Determinants and Consequences of Increased Cross-border Shareholder Activism (September 20, 2021). Available at SSRN: https://ssrn.com/abstract=3721680 or http://dx.doi.org/10.2139/ssrn.3721680

Mark G. Maffett (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Anya Nakhmurina

Yale School of Management ( email )

165 Whitney Ave
New Haven, CT 06511
United States

Douglas J. Skinner

The University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-7137 (Phone)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
293
Abstract Views
1,377
rank
131,941
PlumX Metrics