The costs of shareholder activism: Evidence from a sequential decision model

• 成果类型: Article
• 署名作者: Gantchev, Nickolay
• 署名单位: 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.2012.09.007
• 发表日期: 2013
• 页码: 610-631
• 关键词: SHAREHOLDER ACTIVISM; Hedge funds; institutional investors; monitoring; corporate governance

摘要

This paper provides benchmarks for monitoring costs and evaluates the net returns to shareholder activism. I model activism as a sequential decision process consisting of demand negotiations, board representation, and proxy contest and estimate the costs of each activism stage. A campaign ending in a proxy fight has average costs of $10.71 million. I find that the estimated monitoring costs reduce activist returns by more than two-thirds. The mean net activist return is close to zero but the top quartile of activists earns higher returns on their activist holdings than on their non-activist investments. The large-sample evidence presented in this paper aids in understanding the nature and evolution of activist engagements. (C) Elsevier B.V. All rights reserved.