Hedge Fund Activism, Corporate Governance, and Firm Performance

Hedge Fund Activism, Corporate Governance, and Firm Performance

Alon Brav, Wei Jiang, Frank Partnoy, Randall Thomas

Series number :

Serial Number: 

Date posted :

September 01 2006

Last revised :

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  • hedge fund • 
  • Activism • 
  • governance

Using a large hand-collected dataset from 2001 to 2006, we find that activist hedge funds in the U.S. propose strategic, operational, and financial remedies and attain success or partial success in two thirds of the cases. Hedge funds seldom seek control and in most cases are nonconfrontational.

The abnormal return around the announcement of activism is approximately 7%, with no reversal during the subsequent year. Target firms experience increases in payout, operating performance, and higher CEO turnover after activism. Our analysis provides important new evidence on the mechanisms and effects of informed shareholder monitoring.

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Publication Title: 
Journal of Finance
Vol. 63, p. 1729, 2008


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Research Member, Board Member
Emory University Goizueta Business School
Research Member
Vanderbilt University Law School and Owen School of Management