Returns to Hedge Fund Activism: An International Study

Abstract

This paper provides evidence on the incidence, characteristics, and performance of activist engagements across countries. We find that the incidence of activism is greatest with high institutional ownership, particularly for U.S. institutions. We use a sample of 1,740 activist engagements across 23 countries and find that almost one-quarter of engagements are by multi-activists engaging the same target. These engagements perform strikingly better than single activist engagements. Engagement outcomes, such as board changes and takeovers, vary across countries and significantly contribute to the returns to activism. Japan is an exception, with high initial expectations and low outcomes. (JEL G32)

Thirty years of shareholder activism: A survey of empirical research

“…These results focus on U.S. firms, but they are similar to findings regarding hedge fund activism in the U.K. (Becht et al, 2010), Japan (Hamao, Kutsana, and Matos, 2011), and Germany (Bessler et al, 2015). Becht, Franks, Grant, and Wagner (2015) examine both U.S. and non-U.S. hedge fund activism and report fairly uniform results. In their sample, U.S. targets of hedge fund activism experience a mean abnormal stock return of 6.97%, while European targets' mean abnormal stock return is 6.4% and Asian targets' mean abnormal stock return is 4.8%.…”

“…Data source(s) Type(s) of activism Sponsor(s) Alexander, Chen, Seppi, and Spatt (2010) 1992-2005 DEFC14A, ISS Proxy Anson, White, and Ho (2003a) 1992-2001 CalPERS Focus List NS CalPERS Anson, White, and Ho (2004b) 1992-2002 CalPERS Focus List NS CalPERS Barber (2007Barber ( ) 1992Barber ( -2005 CalPERS Focus List SP, NS CalPERS Bebchuk, Brav, and Jiang (2015) 1994 13D filings HFA Becht, Franks, Grant, and Wagner (2015) 2000-2010 13D Monitor HFA Bizjak and Marquette (1998) Wahal (1996) -PR ( …”

Activism, Strategic Trading, and Liquidity

“…There is a related empirical literature that documents significant effects on stock prices of large blockholder ownership transfers (Barclay and Holderness (1991)), of large CEO ownership stakes (Lilienfeld-Toal and Ruenzi (2014)), and of shareholder activism in the United States (Brav, Jiang, Partnoy, and Thomas (2008), Collin-Dufresne and Fos (2015a)) and internationally (Becht, Franks, Grant, and Wagner (2017)). …”

Shareholder Activism in Malaysia: Is it Effective?

“…Minority shareholder activism can come from various types of minority shareholders, including institutional shareholders (e.g., Crespi & Renneboog, 2010;Hadani, Goranova, & Khan, 2011;Opler & Sokobin, 1995;Smith, 1996), hedge funds (e.g., Becht, Franks, & Grant, 2014;Coffee & Palia, 2014;Gantchev, 2013), and by the retail/individual shareholders (e.g., Gillan & Starks, 1998;Noe, 2002;Mohd Fahmi & Omar, 2005;Yeoh, 2010;Guan, 2005). However, in terms of engagement density, individual minority shareholders activism, in the U.S for example, was great during the rise of shareholder activism after the SEC introduced a rule on shareholders' proposal submissions.…”