Delegated Shareholder Activism

Dan Bernhardt and Shaoting Pi
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Shaoting Pi: Iowa State University

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

Abstract: Hedge fund activists often aim to convince other shareholders to vote for a particular corporate policy, while majority shareholders recognize that activist recommendations serve their own interests, not necessarily maximizing firm value. We show how an activist can increase the likelihood of a favorable vote by delegating the tasks of acquiring information and making recommendations to another activist. This choice balances motivating the delegated activist to acquire costly information against ensuring shareholders trust the recommendation. We characterize how the hedge fund activist’s bias affects the delegation bias, information acquisition, recommendation and shareholder voting decisions, and firm value.

Keywords: Hedge Fund Activism; Delegation; Information Acquisition; Recommendations; Shareholder Voting JEL Codes: D72; G23; G34; D83; K22 (search for similar items in EconPapers)
Date: 2025
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https://warwick.ac.uk/fac/soc/economics/research/w ... _1552-_bernhardt.pdf

Related works:
Working Paper: Delegated Shareholder Activism (2025)
Working Paper: Delegated Shareholder Activism (2024)
Working Paper: Delegated Shareholder Activism (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:wrk:warwec:1552

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