Academic Research

on Activist Investing

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Gompers, Paul A., Ishii, Joy L. and Metrick, Andrew, Corporate Governance and Equity Prices. Quarterly Journal of Economics, Vol. 118, No. 1, pp. 107, February 2003

Seminal paper analyzing the impact of 24 governance factors on equity returns.

Here are notable recent papers on activist investing. Most have appeared in refereed scholarly journals, as shown in the reference. Others are working papers. Papers are listed in approximate chronological order based on date published.

Please let us know of other similar studies.

Bebchuk, Lucian A., Cohen, Alma and Ferrell, Allen, What Matters in Corporate Governance? Review of Financial Studies, Vol. 22, No. 2, pp. 783, February 2009.

Refines Gompers into six most significant factors.

Impact of governance on equity returns

Fodor, Andy and Diavatopoulos, Dean, Does Corporate Governance Matter for Equity Returns? (February 2, 2010 working paper).

Critique of Gompers and Bebchuk papers.

Gillan, Stuart L. and Starks, Laura T., The Evolution of Shareholder Activism in the United States. Journal of Applied Corporate Finance, Vol. 19, Issue 1, pp. 55, Winter 2007.

Summary of a number of earlier analyses, with a thorough explanation of activism.

Impact of activist investing on equity returns

Working paper

Excess returns of 8-21%

Boyson, Nicole M. and Mooradian, Robert M., Hedge Funds as Shareholder Activists from 1994-2005 (July 31, 2007).

Working paper

Excess returns of 7-11%

Brav, Alon, Jiang, Wei, Thomas, Randall S. and Partnoy, Frank, Hedge Fund Activism, Corporate Governance, and Firm Performance. Journal of Finance, Vol. 63, No. 4, pp. 1729, May 2008.

Published paper

Excess returns of 7%

Klein, April and Zur, Emanuel, Entrepreneurial Shareholder Activism: Hedge Funds and Other Private Investors. Journal of Finance, Vol. 64, No. 1, pp. 187, February 2009.

Published paper

Excess returns of 21.6%

Greenwood, Robin, and Schor, Michael, Investor Activism and Takeovers. Journal of Financial Economics, Vol. 92, No. 3 , pp. 362, June 2009.

Published paper

Excess returns of 10.3%, due mostly to M&A

Brav, Alon, Jiang, Wei and Kim, Hyunseob, Hedge Fund Activism: A Review. Foundations and Trends in Finance, Vol. 4, No. 3, pp. 185, 2009.

Published paper

Survey of five preceding papers.

Larcker, David F., Ormazabal, Gaizka and Taylor, Daniel J., The Market Reaction to Corporate Governance Regulation (October 14, 2010). Journal of Financial Economics (JFE), Forthcoming; Rock Center for Corporate Governance at Stanford University Working Paper Series No. 82.

Analysis finds that governance changes do not add shareholder value.

Bratton, William W., Hedge Funds and Governance Targets: Long-Term Results (September 8, 2010). University of Pennsylvania Institute for Law & Economics Research Paper No. 10-17.

Analysis finds no excess returns from activism.

Gantchev, Nickolay M., The Costs of Shareholder Activism: Evidence from a Sequential Decision Model. Working paper, November 2009.

Estimates average cost of $10.5 million for a complete proxy effort.

Becker, Bo, Bergstresser, Daniel, and Subramanian, Guhan, Does Shareholder Proxy Access Improve Firm Value? Evidence from the Business Roundtable Challenge. Working paper, October 2010.

Analysis finds proxy access would increase shareholder value at affected companies.

Kahan, Marcel and Rock, Edward B., The Insignificance of Proxy Access (October 21, 2010). U of Penn, Inst for Law & Econ Research Paper No. 10-26; NYU Law and Economics Research Paper No. 10-51.

Law review article finds proxy access applies in an immaterial number of companies.

Proxy access

Elson, Charles M. and Ferrere, Craig K., Executive Superstars, Peer Groups, and Over-Compensation - Cause, Effect, and Solution (August 7, 2012 working paper).

Analyzes the market for CEOs relative to peer group benchmarking

Kaplan, Steven N., Executive Compensation and Corporate Governance in the U.S.: Perceptions, Facts and Challenges (August 22, 2012). Chicago Booth Research Paper No. 12-42; Fama-Miller Working Paper.

Analyzes CEO pay relative to corporate performance

Exec Comp

Gantchev, Nickolay and Jotikasthira, Pab, Activist Hedge Funds: Who's on the Other Side of Their Trades? (August 31, 2012 working paper).

Analyzes trading patterns of activist investors around activist announcements


Brav, Alon P., Jiang, Wei and Kim, Hyunseob, The Real Effects of Hedge Fund Activism: Productivity, Risk, and Product Market Competition (November 17, 2011 working paper).

Analyzes how productivity improvements lead to excess returns from activism

Bebchuk, Lucian A., Cohen, Alma and Wang, Charles C. Y., Learning and the Disappearing Association Between Governance and Returns (June 1, 2011 working paper).

Explains relationship between governance changes and shareholder value from 1991-2008

Cunat, Vicente, Gine, Mireia, and Guadalupe, Maria, The Vote is Cast: The Effect of Corporate Governance on Shareholder Value, Journal of Finance, Vol. 97, No. 5., pp. 1943, October 2012

Estimates excess returns of 2.8% for firms that adopt shareholder proposals

Fried, Jesse M., The Uneasy Case for Favoring Long-Term Shareholders (March 18, 2013 working paper).

Demonstrates how long-term shareholders can have as narrow (or broad) interests in corporate profits as short-term investors

Bebchuk, Lucian, A., The Myth that Insulating Boards Serves Long-Term Value (August 2013 working paper).

Refutes claims that entrenchment methods, such as classified BoD, increases shareholder value

Klausner, Michael, Fact and Fiction in Corporate Law and Governance, Stanford Law Review, Vol. 65, No. 6., 2013

Refutes the “contractarian” approach to corporate law, which underlies the director primacy philosophy of corporate governance

Huang, Sterling, Zombie Boards: Board Tenure and Firm Performance (July 2013 working paper)

Shows how longer BoD tenure first improves, then hurts firm performance,

Fos, Vyacheslav, The Disciplinary Effects of Proxy Contests (September 2013 working paper).

Shows how proxy contests can improve corp gov and firm performance

Cremers, Martijn and Litov, Lubomir P. and Sepe, Simone M., Staggered Boards and Firm Value, Revisited (July 14, 2014 working paper)

Shows how classified BoDs hurts share price performance

Cremers, Martijn and Ferrell, Allen, Thirty Years of Shareholder Rights and Firm Value, The Journal of Finance, 69: 1167–1196 (June 2014)

Analysis of impact of corp gov on returns

Becht, Marco, Franks, Julian R., Grant, Jeremy and Wagner, Hannes F., The Returns to Hedge Fund Activism: An International Study (January 1, 2014), European Corporate Governance Institute (ECGI) - Finance Working Paper No. 402/2014

Working paper. Excess returns of 4.5-7.5%.

Brav, Alon, Jiang, Wei and Tian, Xuan, Shareholder Power and Corporate Innovation: Evidence from Hedge Fund Activism (March 14, 2014), Kelley School of Business Research Paper No. 2014-05

Activist investing has a positive impact on innovation efficiency

Coffee, John C. and Palia, Darius, The Impact of Hedge Fund Activism: Evidence and Implications (September 15, 2014). European Corporate Governance Institute (ECGI) - Law Working Paper No. 266/2014; Columbia Law and Economics Working Paper No. 489.

Review paper, with mixed evidence of impact of activist investing on returns

Lilienfeld-Toal, Ulf von and Schnitzler, Jan, What is Special About Hedge Fund Activism? Evidence from 13-D Filings (June 4, 2014)

Working paper. Excess returns of 4-7%.

Goodwin, Shane, Singh, Akshay, Slipetz, Walter and Rao, Ramesh P., Myopic Investor Myth Debunked: The Long-Term Efficacy of Shareholder Advocacy in the Boardroom (September 14, 2014)

Working paper. Positive impact on portfolio companies five years after activist situation.

Boyson, Nicole M., Ma, Linlin and Mooradian, Robert M., What Causes Performance Persistence in Hedge Fund Activism? (April 2, 2015)

Working paper. Analyzes whether portfolio manager skill or reputation creates excess returns.

Becht, Marco, Franks, Julian R., Grant, Jeremy and Wagner, Hannes F., The Returns to Hedge Fund Activism: An International Study (March 2015)

Working paper. Non-US activist projects outperform US projects.

Krishnan, C. N. V., Partnoy, Frank and Thomas, Randall S., Top Hedge Funds and Shareholder Activism (May 28, 2015)

Working paper. Classifies activist hedge funds, and finds excess returns of 6-9%

Denes, Matthew, Karpoff, Jonathan M. and McWilliams, Dr. Victoria, Thirty Years of Shareholder Activism: A Survey of Empirical Research (May 18, 2015).

Survey paper of 67 other studies, finds consistent excess returns

Bebchuk, Lucian A., Brav, Alon and Jiang, Wei, The Long-Term Effects of Hedge Fund Activism, Columbia Law Review, Vol. 115, 2015, pp. 1085-1156 (June 2015)

Thorough analysis of long-term (five years) impact of activist investing on corporate performance