Shareholder Activism, Takeovers, and Managerial Discipline

Francesco Celentano and Oliver Levine
Additional contact information
Francesco Celentano: University of Lausanne - Faculty of Business and Economics (HEC Lausanne); Swiss Finance Institute
Oliver Levine: University of Wisconsin - Madison - Department of Finance

No 25-81, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: We quantitatively assess the role of activism in the market for corporate control by developing and estimating a model featuring both activism and M&A. We find that activism complements M&A, reducing the agency frictions associated with takeovers. However, activism simultaneously crowds out some M&A activity by substituting for disciplinary takeovers. Both the threat of activism and actual activist intervention create shareholder value by improving CEO incentives, while the value from reduced takeover frictions is primarily captured by acquirers. We find that activists have an information advantage, which is critical to overcoming the free rider problem in activist intervention.

Keywords: Shareholder Activism; Mergers and Acquisitions (M&A); Agency Conflict; Corporate Governance (search for similar items in EconPapers)
JEL-codes: G14 G23 G32 G34 G39 (search for similar items in EconPapers)
Pages: 64 pages
Date: 2025-10
New Economics Papers: this item is included in nep-cfn
References: Add references at CitEc
Citations:

Downloads: (external link)
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5506659 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp2581

Access Statistics for this paper

More papers in Swiss Finance Institute Research Paper Series from Swiss Finance Institute Contact information at EDIRC.
Bibliographic data for series maintained by Ridima Mittal ().