This paper investigates the causes and consequences of activist block share purchases in the 1980s. We find that activist investors were most likely to purchase large blocks of shares in highly diversified firms with poor profitability. Activists were not less likely to purchase blocks in firms with shark repellents and employee stock ownership plans. Activist block purchases were followed by increases in asset divestitures, decreases in mergers and acquisitions, and abnormal share price appreciation. Industry-adjusted operating profitability also rose. This evidence supports the view that the market for partial corporate control plays an important role in limiting agency costs in U.S. corporations.

c This paper investigates the relationship between ownership structure and corporate restructuring in a sample of 93 surviving public Fortune 500 firnu during the period 1981-87. The results show that blockholder ownership is associated sign$cantly with corporate restructuring, suggesting that many managers restructured their corporations during the 1980s only when pressured to do so by large shareholders.

No abstract

No abstract