Activism and empire building

• 成果类型: Article
• 署名作者: Gantchev, Nickolay; Sevilir, Merih; Shivdasani, Anil
• 署名单位: University of Warwick; Indiana University System; Indiana University Bloomington; IU Kelley School of Business; University of North Carolina; University of North Carolina Chapel Hill
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2020.06.001
• 发表日期: 2020
• 页码: 526-548
• 关键词: SHAREHOLDER ACTIVISM; corporate governance; Mergers and Acquisitions; Empire building; Hedge funds

摘要

Hedge fund activists target firms engaging in empire building and improve their future acquisition and divestiture strategy. Following intervention, activist targets make fewer acquisitions but obtain substantially higher returns by avoiding large and diversifying deals and refraining from acquisitions during merger waves. Activist targets also increase the pace of divestitures and achieve higher divestiture returns than matched non-targets. Activists curtail empire building through the removal of empire building chief executive officers (CEOs), compensation based incentives, and appointment of new board members. Our findings highlight an important channel through which activists improve efficiency and create shareholder value. (C) 2020 Elsevier B.V. All rights reserved.