Corporate Governance and Hedge Fund Activism

Goodwin, Shane C.

doi:10.2139/ssrn.2646293

Cited by 2 publications

(4 citation statements)

References 123 publications

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“…2. The date at which the intervention really occurs is rarely explicit; the intervention's impact may be measured from the date of 13D filing or other public announcement, or the date at which the activist's demands are satisfied and whether the activist is eventually successful or not with his demands; these different dates and events make a significant difference in assessing the impact of the intervention (Goodwin, 2015). Karpoff (2001) illustrated the discrepancies among 20 empirical studies on the effects of shareholder activism.…”

Section: Introductionmentioning

confidence: 99%

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The game of ‘activist’ hedge funds: Cui bono?

Allaire

Dauphin

2016

Int J Discl Gov

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This article aims to describe the contemporary objectives and tactics of activist hedge funds as well as the actions taken by the targeted companies as a result of their intervention. In this research, we explore the consequences of activism over time (impact on operational performance and share price returns) and compare these with a random sample of firms with similar characteristics at the time of intervention; we also analyse the singularities associated with salient sub-groups of targeted firms. The sample used for our research consists of all 259 firms targeted by activist hedge funds in 2010 and 2011. We found evidence that any improvements in operating performance (return on assets, return on equity, Tobin's Q) result mainly from selling assets, cutting capital expenditures, buying back shares, reduce workforce and other basic financial manoeuvres. Although there is no evidence of deterioration over a 3-year period, the stock's performance of targeted companies over a 3-year span barely matches the performance of a random sample of companies. We found that the best way for activists to make money for their funds is to get the company sold off or substantial assets spun off. If not sold, the hedge fund episode often results for the targeted firms in change of senior management and board members, stagnation of assets and R&D. This research does not provide any evidence of the superior strategic sagacity of hedge fund managers, but does point to their keen understanding of what moves stock prices in the short term.

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Section: Introductionmentioning

confidence: 99%

“…Karpoff (2001) illustrated the discrepancies among 20 empirical studies on the effects of shareholder activism. Bebchuk et al (2013Bebchuk et al ( , 2015 1994-2007 N/A 2040 N/A Goodwin (2015) 1990-2014 N/A N/A 3202…”

Section: Introductionmentioning

confidence: 99%

The game of ‘activist’ hedge funds: Cui bono?

Allaire

Dauphin

2016

Int J Discl Gov

View full text Add to dashboard Cite

show abstract

Section: Introductionmentioning

confidence: 99%

“…Karpoff (2001) illustrated the discrepancies among 20 empirical studies on the effects of shareholder activism. Xu and Li (2011) 1994-2008 505 3686 2626 Zhu (2013) 1994-2007 330 1264 988 Clifford (2008Clifford ( ) 1998Clifford ( -2005 788 N/A Boyson and Mooradian (2011) 1994-2005 418 397 Greenwood and Schor (2009) 1994-2006 784 N/A Gantchev (2013) 2000-2007 171 1164 1023 Bebchuk et al (2013Bebchuk et al ( , 2015 1994-2007 N/A 2040 N/A Goodwin (2015) 1990-2014 N/A N/A 3202 He pointed out differences in time periods, sample sizes, types of events examined and definitions of success in shareholder activism (he found six different definitions of success). 3.…”

Section: Introductionmentioning

confidence: 99%