Investor Protection and the Long-Run Performance of Activism

Pouyan Foroughi, Namho Kang, Gideon Ozik and Ronnie Sadka

Journal of Financial and Quantitative Analysis, 2019, vol. 54, issue 1, 61-100

Abstract: Using a parsimonious measure of investor protection constructed from fund organizational characteristics, this paper documents that companies targeted by activists with better investor protection structures outperform those targeted by those with poor investor protection structures by roughly 10% per year. The outperformance is observed only for active targets for which Schedule 13Ds are filed, not for passive Schedule 13G investments, indicating that the effect is not explained by a superior target-selection ability. The evidence suggests that funds with better investor protection achieve increased profitability and valuation ratio of their targets by reducing agency costs, improving corporate governance, and collaborating with other large institutional investors.

Date: 2019
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.cambridge.org/core/product/identifier/ ... type/journal_article link to article abstract page (text/html)

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:cup:jfinqa:v:54:y:2019:i:01:p:61-100_00

Access Statistics for this article

More articles in Journal of Financial and Quantitative Analysis from Cambridge University Press Cambridge University Press, UPH, Shaftesbury Road, Cambridge CB2 8BS UK.
Bibliographic data for series maintained by Kirk Stebbing ().