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Activism and empire building
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Gantchev, N., Sevilir, M. and Shivdasani, A. (2020) Activism and empire building. Journal of Financial Economics, 138 (2). pp. 526-548. doi:10.1016/j.jfineco.2020.06.001 ISSN 0304-405X.
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Official URL: https://doi.org/10.1016/j.jfineco.2020.06.001
Abstract
Hedge fund activists target firms engaging in empire building and improve their future acquisition and divestiture strategy. Following intervention, activist targets make fewer acquisitions but obtain substantially higher returns by avoiding large and diversifying deals and refraining from acquisitions during merger waves. Activist targets also increase the pace of divestitures and achieve higher divestiture returns than matched non-targets. Activists curtail empire building through the removal of empire building chief executive officers (CEOs), compensation based incentives, and appointment of new board members. Our findings highlight an important channel through which activists improve efficiency and create shareholder value.
Item Type: | Journal Article | ||||||||
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Subjects: | H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HG Finance |
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Divisions: | Faculty of Social Sciences > Warwick Business School > Finance Group Faculty of Social Sciences > Warwick Business School |
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Library of Congress Subject Headings (LCSH): | Hedge funds, Stockholders, Stockholders' derivative actions , Corporate governance, Consolidation and merger of corporations | ||||||||
Journal or Publication Title: | Journal of Financial Economics | ||||||||
Publisher: | Elsevier Science BV | ||||||||
ISSN: | 0304-405X | ||||||||
Official Date: | November 2020 | ||||||||
Dates: |
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Volume: | 138 | ||||||||
Number: | 2 | ||||||||
Page Range: | pp. 526-548 | ||||||||
DOI: | 10.1016/j.jfineco.2020.06.001 | ||||||||
Status: | Peer Reviewed | ||||||||
Publication Status: | Published | ||||||||
Access rights to Published version: | Restricted or Subscription Access | ||||||||
Date of first compliant deposit: | 12 November 2020 | ||||||||
Date of first compliant Open Access: | 8 December 2021 | ||||||||
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