Hedge Fund Activism: A Review

By Alon Brav, Wei Jiang, Hyunseob Kim. Foundations and Trends® in Finance, 2010

275 citations recorded by the source corpus.

This monograph reviews shareholder activism by hedge funds. We first describe the nature and characteristics of hedge fund activism, including the objectives, tactics, and choices of target companies. We then analyze possible value creation brought about by activist hedge funds, both for shareholders in the target companies and for investors in the hedge funds. The evidence generally supports the view that hedge fund activism creates value for shareholders by effectively influencing the governance, capital structure decisions, and operating performance of target firms.

Subfields: Accounting, Finance

View Paper: https://www.semanticscholar.org/paper/21ba3a6674f4ec018cf92e8b40efd1340922eb9f

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Citations in the corpus

Corporate Socially Responsible Investments: CEO Altruism, Reputation, and Shareholder Interests (2014, unknown): “10 There is a broad literature illustrating the important effects that institutional investors have on corporate governance and performance (e.g., Brav et al., 2008, 2010).”
Passive Investors, Not Passive Owners (2016, background): “We find no evidence of a positive association between ownership by passive investors and the likelihood of a firm experiencing a hedge fund activism event, as defined by Brav et al. (2008) and Brav, Jiang, and Kim (2010). If anything, we find suggestive evidence of a decline in hedge fund activism.”
Liquidity and Shareholder Activism (2015, background): “Although Brav et al. (2008) report that hedge funds tend to target more liquid firms, they do not consider how liquidity impacts their incentive to undertake activism.”
The Effect of Hedge Fund Activism on Corporate Tax Avoidance (2012, background): “Please refer to Brav et al. (2010) for a detailed review.”
The Empirical Analysis of Liquidity (2014, background): “Barclay and Smith [1988] and Brockman and Chung [2001] find that spreads widen around repurchase periods; Singh et al.”
Why Bank Governance is Different (2011, background): “Hedge-fund activism is more effective (Brav et al., 2009) but in 2000–8 was rarely targeted at banks (Becht et al.”
The Effect of Liquidity on Governance (2011, methodology): “In Table OA3, we study the long-term stock returns to a 13G filing, both before and after the event, using a calendar-time portfolio analysis similar to Brav et al. (2008) for 13D filings.”
The Product Market Effects of Hedge Fund Activism (2016, unknown): “…and model their attrition behavior through the Heckman (1979) selection model.18 The propensity for attrition by rival rm j at time t is Attrition j;t = 0 + 0 1Yj;t 1 + 2Zj;t + j;t: (6) 18This follows Brav, Jiang, and Kim (2009) who conduct attrition bias analysis for target (but not rival) rms.”