Is the role of shareholder activism in corporate governance overestimated?

Josef Bajzik

Finance Research Letters, 2023, vol. 58, issue PC

Abstract: Shareholder activism has become a prominent feature of corporate governance recently. Therefore, I collected 3,159 estimates from 78 empirical studies investigating the shareholder activism-return relationship to scrutinize the effect of shareholder activism on the firm’s returns. I find the effect of shareholder activism is often exaggerated; the literature attributes excessive importance to activism both in the short- and the long-run. For example, the abnormal returns caused by hedge fund activism and direct negotiations are often overestimated. This is, however, not the case with proxy fights, which I found to be the most abnormal-returns-creating activism approach.

Keywords: Abnormal return; Shareholder activism; Sponsors; Activism approaches; Publication bias (search for similar items in EconPapers)
JEL-codes: G14 G30 G34 L20 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:58:y:2023:i:pc:s1544612323008802

DOI: 10.1016/j.frl.2023.104508

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