Does institutional shareholder activism stimulate corporate information flow?

Andrew K. Prevost, Udomsak Wongchoti () and Ben Marshall

Journal of Banking & Finance, 2016, vol. 70, issue C, 105-117

Abstract: Activist shareholders have an incentive to communicate and cooperate with other major shareholders. However, the impact of their activity on information flow surrounding targeted firms is largely unknown. We explore this aspect using a prolific proponent: labor unions. Following the mailing of proxies containing union-sponsored shareholder proposals, trading volume increases significantly and at-issue bond yield spreads of targeted firms are lower compared to matched firms. Subsequent difference-in-differences analyses show that stock prices of targeted firms become more informative as a result of activism, affirming the intuition that activism results in a reduction of differential information between outside investors.

Keywords: Shareholder activism; Stock price informativeness; Labor unions (search for similar items in EconPapers)
JEL-codes: G12 G14 G23 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:70:y:2016:i:c:p:105-117

DOI: 10.1016/j.jbankfin.2016.06.009

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