Yizhi Jasmine Li
ABSTRACT
This paper investigates the overall impact of activist shareholders on US corporations. To conduct the investigation, I looked at the companies in the S&P 500 list over the years of 2010 to 2019. When comparing the levels of performance among the firms with activist(s) involvements and those without, I discovered that both the current ratio and the revenue stream are generally negatively affected as a result of Shareholder Activism. While the exact reason still remains to be unclear, I am able to generate the conclusion that shareholder activism might cause the firms' overall debt to increase and eventually lag their operating income behind to certain extent.
- Thomas, Randall S. "The Evolving Role of Institutional Investors in Corporate Governance and Corporate Litigation." Vanderbilt Law Review, vol. 61, no. 2, Mar. 2008, pp. 299--313. EBSCOhost,search.ebscohost.com/login.aspx?direct=true&AuthType=ip,shib&db=a9h&AN=32194060&site=eds-live.Google Scholar
- Anabtawi, Iman, and Lynn A. Stout. "Fiduciary Duties for Activist Shareholders." SSRN Electronic Journal, 2008, DOI= http://doi:10.2139/ssrn.1089606.Google Scholar
- Barsky, R. B., and J. B. De Long. "Why Does the Stock Market Fluctuate?" The Quarterly Journal of Economics, vol. 108, no. 2, 1993, pp. 291--311., DOI=http://doi:10.2307/2118333.Google ScholarCross Ref
- Blanchard, Olivier, et al."The Stock Market, Profit and Investment." 1990, DOI=http://doi:10.3386/w3370.Google ScholarCross Ref
- Bond, Stephen, and Jason G. Cummins. "The Stock Market and Investment in the New Economy: Some Tangible Facts and Intangible Fictions." Brookings Papers on Economic Activity, vol. 2000, no. 1, 2000, pp. 61--107., DOI=http://doi:10.1353/eca.2000.0003.Google ScholarCross Ref
- Cornell, Bradford, and Alan C. Shapiro. "Corporate Stakeholders and Corporate Finance." Financial Management, vol. 16, no. 1, 1987, p. 5., doi:10.2307/3665543.Google ScholarCross Ref
- Gillan, Stuart L., and Laura T. Starks. "Corporate Governance Proposals and Shareholder Activism: the Role of Institutional Investors." Journal of Financial Economics, vol. 57, no. 2, 2000, pp. 275--305., doi:10.1016/s0304-405x(00)00058-1.Google ScholarCross Ref
- Jiraporn, Pornsit, and Kimberly C. Gleason. "Capital Structure, Shareholder Rights, and Corporate Governance." SSRN Electronic Journal, 2005, DOI=http://doi:10.2139/ssrn.792604.Google Scholar
- Lazonick, William, and Mary O'Sullivan. "Maximizing Shareholder Value: A New Ideology for Corporate Governance." Corporate Governance and Sustainable Prosperity, 2002, pp. 11--36., DOI=http://doi:10.1057/9780230523739_2.Google Scholar
- Logsdon, Jeanne M., and Harry J. Van Buren. "Justice and Large Corporations." Business & Society, vol. 47, no. 4, 2008, pp. 523--548., DOI=http://doi:10.1177/0007650308316524.Google ScholarCross Ref
- Matheson, John H..., and Vilena2 Nicolet. "Shareholder Democracy and Special Interest Governance." Minnesota Law Review, vol. 103, no. 4, Apr. 2019, pp. 1649--1697. EBSCOhost,search.ebscohost.com/login.aspx?direct=true&AuthType=ip,shib&db=lft&AN=136143819&site=eds-live.Google Scholar
- Monks, Robert, et al. "Shareholder Activism on Environmental Issues: A Study of Proposals at Large US Corporations (2000-2003)." Natural Resources Forum, vol. 28, no. 4, 2004, pp. 317--330., DOI= doi:10.1111/j.1477-8947.2004.00104.x.Google ScholarCross Ref
- Rehbein, Kathleen, et al. "Understanding Shareholder Activism: Which Corporations Are Targeted?" Business & Society, vol. 43, no. 3, 2004, pp. 239--267., DOI= http://doi:10.1177/0007650304266869.Google ScholarCross Ref
- Matheson, John H..., and Vilena2 Nicolet. "Shareholder Democracy and Special Interest Governance." Minnesota Law Review, vol. 103, no. 4, Apr. 2019, pp. 1649--1697. EBSCOhost,search.ebscohost.com/login.aspx?direct=true&AuthType=ip,shib&db=lft&AN=136143819&site=eds-live.Google Scholar
Index Terms
- The Impact of Shareholder Activism on a Firm's Performance
Recommendations
The Corporate Opportunity Structure for Shareholder Activism: How Activist Hedge Funds Exploit Board Demographic Diversity
Inspired by research on social movements, we extend the idea that activists look for opportunities to target firms to the realm of financially motivated shareholder activists. Focusing on activist hedge funds, we argue that hedge fund campaigns are more ...
Institutional Investor Activism and Employee Safety: The Role of Activist and Board Political Ideology
Although prior research on shareholder activism has highlighted how such activism can economically benefit the shareholders of targeted firms, recent studies also suggest that shareholder activism can economically disadvantage nonshareholder stakeholders, ...
Institutional Trading and Hedge Fund Activism
This paper investigates the role of institutional trading in the emergence of hedge fund activism-an important corporate governance mechanism. We demonstrate that institutional sales raise a firm's probability of becoming an activist target. Furthermore,...
Comments