Hedge fund activism and corporate innovation

Tingfeng Tang

Economic Modelling, 2020, vol. 85, issue C, 335-348

Abstract: This paper investigates the impact of hedge fund activism on corporate innovating activities. It finds that innovative firms are as likely to be targeted by activist hedge funds as non-innovative firms. Activist hedge funds tend to target innovative firms with low innovation efficiency. Hedge fund interventions are associated with significant improvements in innovation output in both highly competitive and less competitive industries. The improvement is more pronounced in active intervention events. Our results suggest that activist hedge funds are not myopic investors and their interventions enhance innovative activities that benefit innovative firms’ long-term performance.

Keywords: Corporate innovation; Corporate governance; Hedge fund activism; Active intervention (search for similar items in EconPapers)
JEL-codes: G23 G34 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:85:y:2020:i:c:p:335-348

DOI: 10.1016/j.econmod.2019.11.004

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