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The costs of shareholder activism : evidence from a sequential decision model
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Gantchev, Nickolay (2013) The costs of shareholder activism : evidence from a sequential decision model. Journal of Financial Economics, 107 (3). pp. 610-631. doi:10.1016/j.jfineco.2012.09.007 ISSN 0304-405X.
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Official URL: http://dx.doi.org/10.1016/j.jfineco.2012.09.007
Abstract
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.
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): | Stockholders' derivative actions , Hedge funds , Institutional investors, Corporate governance | ||||||||
Journal or Publication Title: | Journal of Financial Economics | ||||||||
Publisher: | Elsevier Science BV | ||||||||
ISSN: | 0304-405X | ||||||||
Official Date: | March 2013 | ||||||||
Dates: |
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Volume: | 107 | ||||||||
Number: | 3 | ||||||||
Page Range: | pp. 610-631 | ||||||||
DOI: | 10.1016/j.jfineco.2012.09.007 | ||||||||
Status: | Peer Reviewed | ||||||||
Publication Status: | Published | ||||||||
Access rights to Published version: | Restricted or Subscription Access | ||||||||
Date of first compliant deposit: | 11 November 2020 | ||||||||
Date of first compliant Open Access: | 11 November 2020 |
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