We develop a model in which an activist shareholder can discipline management through intervention and through the threat of intervention. A weaker disciplinary role played by the intervention mechanism leads to lower firm value and more frequent ex post interventions. Thus, more frequent ex post interventions are not necessarily a sign of enhanced economic efficiency.
In general, we show that the ex ante threat and ex post intervention can act as complements or substitutes. Because we endogenize the activist's choice of toehold, we also show that the effect of liquidity trading on firm value depends on the timing of liquidity trading.
Using natural language processing, we identify and categorize the corporate goals in the shareholder letters of the 150 largest companies in the United...
Public attention to a firm may provide valuable monitoring, but it may also have a dark side by constraining management’s decisions and distracting...
We provide the first systematic evidence of contractual innovation in the terms of poison pill plans. In response to the increase in hedge fund activism,...