Standing on the Shoulders of Giants: The Effect of Passive Investors on Activism

• 成果类型: Article
• 署名作者: Appel, Ian R.; Gormley, Todd A.; Keim, Donald B.
• 署名单位: Boston College; Washington University (WUSTL); University of Pennsylvania
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhy106
• 发表日期: 2019
• 页码: 2720
• 关键词: HEDGE FUND ACTIVISM; corporate governance; SHAREHOLDER ACTIVISM; INSTITUTIONAL OWNERSHIP; VALUE CREATION; identification; preferences; COSTS

摘要

We analyze whether the growing importance of passive investors has influenced the campaigns, tactics, and successes of activists. We find activists are more likely to seek board representation when a larger share of the target company's stock is held by passively managed mutual funds. Furthermore, higher passive ownership is associated with increased use of proxy fights, settlements, and a higher likelihood the activist achieves board representation or the sale of the targeted company. Our findings suggest that the recent growth of passive institutional investors mitigates free-rider problems and facilitates activists' ability to engage in costly, value-enhancing forms of monitoring.