How does hedge fund activism reshape corporate innovation?

• 成果类型: Article
• 署名作者: Brav, Alon; Jiang, Wei; Ma, Song; Tian, Xuan
• 署名单位: Duke University; National Bureau of Economic Research; Columbia University; Yale University; Tsinghua University
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2018.06.012
• 发表日期: 2018
• 页码: 237-264
• 关键词: HEDGE FUND ACTIVISM; INNOVATION; resource allocation; Human capital redeployment

摘要

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) expenditures, target firms increase innovation output, as measured by both patent counts and citations, with stronger effects among firms with more diversified innovation portfolios. Reallocation of innovative resources, redeployment of human capital, and change to board-level expertise all contribute to improve target firms' innovation. Additional tests help isolate the effect of intervention from alternative explanations, including mean reversion, sample attrition, voluntary reforms, or activist stock-picking. (C) 2018 Elsevier B.V. All rights reserved.