Dancing with activists

• 成果类型: Article
• 署名作者: Bebchuk, Lucian A.; Brav, Alon; Jiang, Wei; Keusch, Thomas
• 署名单位: Harvard University; Duke University; Columbia University; INSEAD Business School
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2020.01.001
• 发表日期: 2020
• 页码: 1-41
• 关键词: CORPORATE GOVERNANCE; HEDGE FUND ACTIVISM; Activist settlements

摘要

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 consequences of such settlement agreements. Settlements are more likely when the activist has a credible threat to win board seats in a proxy fight and when incumbents' reputation concerns are stronger. Consistent with incomplete contracting, face-saving benefits, and private information considerations, settlements commonly do not contract directly on operational or leadership changes sought by the activist but rather on board composition changes. Settlements are accompanied by positive stock price reactions, and they are subsequently followed by changes of the type sought by activists, including CEO turnover, higher shareholder payouts, and improved operating performance. We find no evidence to support concerns that settlements enable activists to extract rents at the expense of other investors. Our analysis provides a look into the black box of activist engagements and contributes to understanding how activism brings about changes in target companies. (C) 2020 Elsevier B.V. All rights reserved.