Thu, Oct 16, 2025
A A A
Welcome Guest
Free Trial RSS pod
Get FREE trial access to our award winning publications
Alternative Market Briefing

Other Voices: Does hedge-fund activism really increase shareholder value?

Thursday, October 18, 2018

By: Cydney Posner, Cooley, LLP

The public debate about hedge-fund activism has long been informed by academic literature that found increases in shareholder value and operating performance after activist interventions. But do hedge-fund activists actually do any long-term good for the companies that they target? Long-Term Economic Consequences of Hedge Fund Activist Interventions, from the Rock Center for Corporate Governance, examines just that question. The answer? Not so much. But not so much harm either.

Proponents of hedge-fund activism contend that activists provide necessary financial discipline, leading to improved performance. Opponents contend that hedge-fund activists impose a short-term view, impairing the company, its employees and perhaps also its community. To examine these contentions, the authors looked at a sample of 1,964 activist targets from 1994 to 2011, measuring the short-term (the 21-day window surrounding the activist intervention) and long-term (from one month before the intervention through the one and two years thereafter) impact of hedge-fund activist interventions.

The authors found that, consistent with other studies, both short-term and long-term returns that were equal-weighted were significantly positive-5.4% for short-term returns and 6.8% for one-year and 5.9% for two-year returns. However, that picture grew more refined when the returns w......................

To view our full article Click here

Previous Opalesque Exclusives                                  
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Global fintech investment slumps to seven-year low of $95.6bn[more]

    Laxman Pai, Opalesque Asia: Global fintech investment plummeted to $95.6 billion across 4,639 deals in 2024, marking its lowest level since 2017, as investors grappled with persistent macroeconomic challenges and geopolitical tensions, revealed a study. According to the Pulse of Fintech H2'

  2. Opalesque Exclusive: Private capital deal value climbed 19% in 2024[more]

    Bailey McCann, Opalesque New York: Private capital deal value climbed 19% in 2024, according to the latest data from the Global Private Capital Association. Growth was driven by big-ticket investments across Southeast Asia, Latin America and Central & Eastern Europe (CEE). Investor confidence

  3. Opalesque Roundup: Citco: 77% of hedge funds achieved positive returns in January 2025: hedge fund news[more]

    In the week ending February 21st, 2025, a report revealed that hedge funds enjoyed one of their best opening months this decade in January, as Equity and Multi-Strategy funds posted strong returns. Funds administered by the Citco group of companies (Citco) delivered a weighted average return of 4%,

  4. Opalesque exclusive: Permuto's new equity unbundling product to change investment model[more]

    Opalesque Geneva for New Managers: Here is a different way of owning stocks coming to you soon: the option of holding just the dividend portion of a stock, independent of its price movements. Or capturing the stock&

  5. Opalesque Exclusive: Hedge funds outperform mutual funds in managing extreme risk contagion - key insights for investors[more]

    Matthias Knab, Opalesque for New Managers: Hedge funds and mutual funds are among the most prominent vehicles for investors seeking growth and diversification. However, a critical question persists: which fund ty