Alon Brav

Journal Article Review of Financial Studies · February 1, 2024 We present the first comprehensive study of mutual fund voting in proxy contests. Among contests where voting takes place, passive funds are 10 percentage points less likely than active funds to vote for dissidents. The gap shrinks significantly when accou ... Full text Cite

Wolf Pack Activism

Journal Article Management Science · August 1, 2022 Blockholder monitoring is central to corporate governance, but blockholders large enough to exercise significant unilateral influence are rare. Mechanisms that enable moderately sized blockholders to exert collective influence are therefore important. Exis ... Full text Cite

Retail shareholder participation in the proxy process: Monitoring, engagement, and voting

Journal Article Journal of Financial Economics · May 1, 2022 We study retail shareholder voting using a nearly comprehensive sample of U.S. ownership and voting records. Analyzing turnout within a rational-choice framework, we find participation increases with ownership and expected benefits from winning and decreas ... Full text Cite

Validation capital

Journal Article Texas Law Review · July 1, 2021 Although it is well understood that activist shareholders challenge management, they can also serve as a shield. This Article describes “validation capital,” which occurs when a bloc holder’s—and generally an activist hedge fund’s—presence protects managem ... Cite

Dancing with activists

Journal Article Journal of Financial Economics · July 1, 2020 An important milestone often reached in the life of an activist engagement is entering into a “settlement” agreement between the activist and the target's board. Using a comprehensive hand-collected data set, we analyze the drivers, nature, and consequence ... Full text Cite

How does hedge fund activism reshape corporate innovation?

Journal Article Journal of Financial Economics · November 1, 2018 This paper studies how hedge fund activism impacts corporate innovation. Firms targeted by activists improve their innovation efficiency over the five-year period following hedge fund intervention. Despite a tightening in research and development (R&D) exp ... Full text Cite

Recent Advances in Research on Hedge Fund Activism: Value Creation and Identification

Journal Article Annual Review of Financial Economics · December 7, 2015 Hedge fund activism emerged as a major force of corporate governance in the 2000s. By the mid-2000s, there were between 150 and 200 activist hedge funds in action each year, advocating for changes in 200-300 publicly listed companies in the United States. ... Full text Cite

The Real Effects of Hedge Fund Activism: Productivity, Asset Allocation, and Labor Outcomes

Scholarly Edition · October 1, 2015 This paper studies the long-Term effect of hedge fund activism on firm productivity using plant-level information from the U.S. Census Bureau. A typical target firm improves production efficiency in the 3 years after intervention, with stronger improvement ... Full text Cite

The long-term effects of hedge fund activism

Journal Article Columbia Law Review · June 1, 2015 We test the empirical validity of a claim that has been playing a central role in debates on corporate governance—the claim that interventions by activist hedge funds have a detrimental effect on the long-term interests of companies and their shareholders. ... Cite

Event Studies in Securities Litigation: Low Power, Confounding Effects, and Bias

Journal Article Washington University Law Review · 2015 Cite

Editor's Choice The Real Effects of Hedge Fund Activism: Productivity, Asset Allocation, and Labor Outcomes

Journal Article Review of Financial Studies · 2015 This paper studies the long-term effect of hedge fund activism on firm productivity using plant-level information from the U.S. Census Bureau. A typical target firm improves production efficiency in the 3 years after intervention, with stronger improvement ... Cite

Pre-Disclosure Accumulations by Activist Investors: Evidence and Policy

Journal Article Journal of Corporation Law · April 2013 Cite

Hedge Fund Activism

Chapter · 2012 Cite

Hedge fund activism

Journal Article · January 1, 2012 Full text Cite

Empty voting and the efficiency of corporate governance

Journal Article Journal of Financial Economics · February 1, 2011 We model corporate voting outcomes when an informed trader, such as a hedge fund, can establish separate positions in a firm's shares and votes (empty voting). The positions are separated by borrowing shares on the record date, hedging economic exposure, o ... Full text Cite

The idiosyncratic volatility puzzle: Time trend or speculative episodes

Journal Article Review of Financial Studies · February 1, 2010 Campbell, Lettau, Malkiel, and Xu (2001) document a positive trend in idiosyncratic volatility during the 1962-1997 period. We show that by 2003 volatility falls back to pre-1990s levels. Furthermore, we show that the increase and subsequent reversal is co ... Full text Cite

Hedge fund activism: A review

Journal Article Foundations and Trends in Finance · January 1, 2010 This monograph reviews shareholder activism by hedge funds. We first describe the nature and characteristics of hedge fund activism, including the objectives, tactics, and choices of target companies. We then analyze possible value creation brought about b ... Full text Cite

Hedge Fund Activism: A Review

Journal Article Foundations and Trends in Finance · 2010 Cite

The limits of the limits of arbitrage

Journal Article Review of Finance · January 1, 2010 We test the limits of arbitrage argument for the survival of irrationality-induced financial anomalies by sorting securities on their individual residual variability as a proxy for idiosyncratic risk - a commonly asserted limit to arbitrage - and comparing ... Full text Cite

Activist arbitrage: A study of open-ending attempts of closed-end funds

Journal Article Journal of Financial Economics · January 1, 2010 This paper documents frequent attempts by activist arbitrageurs to open-end discounted closed-end funds, particularly after the 1992 proxy reform which reduced the costs of communication among shareholders. Open-ending attempts have a substantial effect on ... Full text Cite

Evidence on the Trade-Off between Risk and Return for IPO and SEO Firms

Journal Article Financial Management · June 1, 2009 Do the low long-run average returns of equity bissuers reflect underperformance due to mispricing or the risk characteristics of the issuing firms? We shed new light on this question by examining how institutional lenders price loans of equity issuing firm ... Full text Cite

Managerial response to the may 2003 dividend tax cut

Journal Article Financial Management · December 1, 2008 We survey 328 financial executives to determine the effects of the May 2003 dividend tax cut. We find that the tax cut led to initiations and dividend increases at some firms. However, executives say that among the factors that affect dividend policy, the ... Full text Cite

The returns to hedge fund activism

Journal Article Financial Analysts Journal · November 1, 2008 Hedge fund activism is a new form of investment strategy. Using a large hand-collected dataset 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 su ... Full text Cite

Hedge fund activism, corporate governance, and firm performance

Journal Article Journal of Finance · August 1, 2008 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 ... Full text Cite

The effect of the May 2003 dividend tax cut on corporate dividend policy: Empirical and survey evidence

Journal Article National Tax Journal · January 1, 2008 We analyze the impact of the May 2003 dividend tax cut on corporate dividend policy. First, we find that while there was a temporary increase in dividend initiations, this increase was not long-lasting. While dividend payments were increased right after th ... Full text Cite

Payout policy in the 21st century

Journal Article Journal of Financial Economics · September 1, 2005 We survey 384 financial executives and conduct in-depth interviews with an additional 23 to determine the factors that drive dividend and share repurchase decisions. Our findings indicate that maintaining the dividend level is on par with investment decisi ... Full text Cite

Using expectations to test asset pricing models

Journal Article Financial Management · January 1, 2005 Asset pricing models generate predictions relating assets' expected rates of return and their risk attributes. Most tests of these models have employed realized rates of return as a proxy for expected return. We use analysts' expected rates of return to ex ... Full text Cite

The rational-behavioral debate in financial economics

Journal Article Journal of Economic Methodology · December 1, 2004 The contest between rational and behavioral finance is poorly understood as a contest overtestability' and 'predictive success.' In fact, neither rational nor behavioral finance offer much in the way of testable predictions of improving precision. Research ... Full text Cite

Market Indeterminacy

Journal Article Journal of Corporation Law · 2003 Cite

The Role of Lockups in Initial Public Offerings

Journal Article Review of Financial Studies · January 1, 2003 In a sample of 2,794 initial public offerings (IPOs), we test three potential explanations for the existence of IPO lockups: lockups serve as (i) a signal of firm quality, (ii) a commitment device to alleviate moral hazard problems, or (iii) a mechanism fo ... Full text Cite

An Empirical Analysis of Analysts' Target Prices: Short-term Informativeness and Long-term Dynamics

Journal Article Journal of Finance · January 1, 2003 Using a large database of analysts' target prices issued over the period 1997-1999, we examine short-term market reactions to target price revisions and long-term comovement of target and stock prices. We find a significant market reaction to the informati ... Full text Cite

Asset pricing with heterogeneous consumers and limited participation: Empirical evidence

Journal Article Journal of Political Economy · August 1, 2002 We present evidence that the equity premium and the premium of value stocks over growth stocks are consistent in the 1982-96 period with a stochastic discount factor calculated as the weighted average of individual households' marginal rate of substitution ... Full text Cite

Competing Theories of Financial Anomalies

Journal Article Review of Financial Studies · January 1, 2002 We compare two competing theories of financial anomalies: "behavioral" theories built on investor irrationality, and "rational structural uncertainty" theories built on incomplete information about the structure of the economic environment. We find that al ... Full text Cite

Inference in long-horizon event studies: A Bayesian approach with application to initial public offerings

Journal Article Journal of Finance · January 1, 2000 Statistical inference in long-horizon event studies has been hampered by the fact that abnormal returns are neither normally distributed nor independent. This study presents a new approach to inference that overcomes these difficulties and dominates other ... Full text Cite

Is the abnormal return following equity issuances anomalous?

Journal Article Journal of Financial Economics · January 1, 2000 We examine whether a distinct equity issuer underperformance anomaly exists. In a sample of initial public offering (IPO) and seasoned equity offering (SEO) firms from 1975 to 1992, we find that underperformance is concentrated primarily in small issuing f ... Full text Cite

Myth or reality? The long-run underperformance of initial public offerings: Evidence from venture and nonventure capital-backed companies

Journal Article Journal of Finance · January 1, 1997 We investigate the long-run underperformance of recent initial public offering (IPO) firms in a sample of 934 venture-backed IPOs from 1972-1992 and 3,407 nonventure-backed IPOs from 1975-1992. We find that venture-backed IPOs outperform non-venture-backed ... Full text Cite