Importing Activists: Determinants and Consequences of Increased Cross-border Shareholder Activism
78 Pages Posted: 29 Dec 2020 Last revised: 23 Mar 2022
Date Written: March 19, 2022
We analyze nearly 7,000 activist shareholder campaigns across 56 countries and show that shareholder activism is now a global phenomenon. Our analyses provide evidence on the factors that explain the spread of activism and on two related questions. First, we measure the extent to which a country’s governance regulations facilitate shareholder engagement, a necessary condition for activism, and show that our measure of shareholder-empowering corporate governance regulation explains cross-country variation in the emergence of activism. Second, we show that for firms facing a high threat of activism but not yet targeted by an activist campaign, changes in these regulations affect corporate outcomes (i.e., there are spillovers)—including increased profitability, higher payouts, and reduced investment. These effects are most pronounced in countries with weak minority shareholder rights, where activism had previously been relatively unimportant.
Keywords: Shareholder Activism, Corporate Governance, Regulation, Real Effects
JEL Classification: F55, G38, K22, M48
Suggested Citation: Suggested Citation