Hedge fund activism, corporate governance, and firm performance

Published

Journal Article

Using a large hand-collected data set from 2001 to 2006, we find that activist hedge funds in the United States propose strategic, operational, and financial remedies and attain success or partial success in two-thirds of the cases. Hedge funds seldom seek control and in most cases are nonconfrontational. The abnormal return around the announcement of activism is approximately 7%, with no reversal during the subsequent year. Target firms experience increases in payout, operating performance, and higher CEO turnover after activism. Our analysis provides important new evidence on the mechanisms and effects of informed shareholder monitoring. © 2008 The American Finance Association.

Full Text

Duke Authors

Cited Authors

  • Brav, A; Jiang, W; Partnoy, F; Thomas, R

Published Date

  • August 1, 2008

Published In

Volume / Issue

  • 63 / 4

Start / End Page

  • 1729 - 1775

Electronic International Standard Serial Number (EISSN)

  • 1540-6261

International Standard Serial Number (ISSN)

  • 0022-1082

Digital Object Identifier (DOI)

  • 10.1111/j.1540-6261.2008.01373.x

Citation Source

  • Scopus