Over the past century, shareholder activism has gone through a sea of change as the democratization of financial markets allowed for the fragmentation of business ownership. In todays financial markets, activist investors have branded themselves as the voice for minority shareholders and advocate for a number of financial and operational changes for their portfolio companies. Critics, instead, argue that activist investors focus merely on the short-term and do not make changes that are good for a businesss future. Over time shareholder activism passed through a period of stagnant change, with a large discrepancy between management and owners. Throughout the 1970s and 1980s, companies that were complacent in their approach to managing capital increasingly saw their firm under potential assault from corporate raiders. These raiders that used junk bonds to help fuel their purchase of large companies were handsomely rewarded when management teams acceded to their requests or offered them a premium to the current market price to close their position.This thesis analyzes equity returns for prominent activist hedge funds to help determine the path of equity returns following the investors exit from the stock. It compares the stock returns over the five-year period that includes the beginning of 2012 to the end of 2017. First, the investments absolute returns over the period are analyzed to determine whether there was positive nominal returns. Next, these returns are compared to the S&P 500 on a relative basis over the respective investment period being analyzed. In addition, the average returns and returns over the one, three, five-year time period are compared to the activist hedge funds that are used in this study. These different return series and data are analyzed to determine whether the variables such as strategies implemented or assets under management are indicative of a hedge funds ability to deliver returns that are above that of the market.Overall, this study concludes that the return profile for activist investors across mid to large cap stocks is heavily dependent on the activist manager. The implications of this study suggest that long-term returns from activist fund managers may not be greater than that of the market. The one-year, three-year, and max return periods for a number of the firms that are analyzed in this study are negative on an absolute and relative basis. Only two of the activist funds that are studied have returns that are both nominal in nature and greater than the S&P 500 over each time frame being studied. At the same time, the average returns for each fund are also lower than that of the S&P 500 for five of the seven activist funds that are measured in this study. Since this study was only completed in regards to large cap stocks, further research should study the investment returns of activist investor in small cap stocks. Furthermore, looking at returns for activist funds with different investment strategies and objectives than the ones presented in this study could help determine which form of activism has a greater propensity to succeed in the long term.

Hedge Fund Activism begins with a brief outline of the research literature and describes datasets on hedge fund activism.

The Foundations and Anatomy of Shareholder Activism examines the landscape of contemporary shareholder activism in the UK. The book focuses on minority shareholder activism in publicly listed companies. It argues that contemporary shareholder activism in the UK is dominated by two groups; one, the institutional shareholders whose shareholder activism is largely seen as a driving force for good corporate governance, and two, the hedge funds whose shareholder activism is based on value extraction and exit. The book provides a detailed examination of both types of shareholder activism, and discusses critically the nature of, motivations for and consequences following both types of shareholder activism. The book then locates both types of shareholder activism in the theory of the company and the fabric of company law, and argues that institutional shareholder activism based on exercising a voice at general meetings is well supported in theory and law. The call for institutions to engage in more informal forms of activism in the name of 'stewardship' may bring about challenges to the current patterns of activism that institutions engage in. The book argues, however, that a more cautious view of hedge fund activism and the pattern of value extraction and exit should be taken. More empirical evidence is likely to be necessary, however, to weigh up the long terms benefits and costs of hedge fund activism.

This book provides a complete framework for contemporary shareholder activism and its implications for US corporate governance, which is based on director primacy theory. Under director primacy theory, shareholders do not wish to be involved in the management of the company; in the rare event that they wish to be involved, it is considered a transfer of power from the board of directors to shareholders, which in turn reduces the efficiency of centralised decision-making in public companies. However, this book demonstrates that shareholders do not use their power to transfer corporate control from the board to themselves, and that some form of shareholder activism is even collaborative, which is a new paradigm for US corporate governance. This book shows that while monitoring remains a key contribution of shareholders, they also bring new informational inputs to corporate decision-making that could not be obtained under the traditional board model. Accordingly, contemporary shareholder activism enhances the board’s decision-making and monitoring capacity, without undermining the economic value of the board's authority. Therefore, this book argues that the complete approach of contemporary shareholder activism should be accommodated into US corporate governance. In doing so, this book considers not only legal and regulatory developments in the wake of the 2007–2008 financial crisis, but also the governance developments through by-law amendments. Furthermore, the author makes several recommendations to soften the current director primacy model: establishing a level playing field for private ordering, adopting the proxy access default regime, the majority voting rule, the universal proxy rules, and enhancing the disclosure requirements of shareholders. The book will be of interest to academics and students of corporate governance, both in the US and internationally.

It once took two decades to replace one-third of the Fortune 500; now a subset of new firms are challenging and displacing this elite group at a breathtaking rate, while armies of startups come and go within just a few years. Most new jobs are, in fact, coming from small firms, reversing the trend of a century. David Audretsch takes a close look at the U.S. economy in motion, providing a detailed and systematic investigation of the dynamic process by which industries and firms enter into markets, either grow and survive, or disappear. He shapes a clear understanding of the role that small, entrepreneurial firms play in this evolutionary process and in the asymmetric size distribution of firms in the typical industry.Audretsch introduces the large longitudinal database maintained by the U.S. Small Business Administration that is used to identify the startup of new firms and track their performance over time. He then provides different snapshots of the process of industries in motion: why new-firm startup activity varies so greatly across industries; what happens to these firms after they enter the market; the extent to which entrepreneurial firms account for an industry's economic activity and why that measure varies across industries; how small firms compensate for size-related disadvantages; and who exits and why.Audretsch concludes that the structure of industries is characterized by a high degree of fluidity and turbulence, even as the patterns of evolution vary considerably from industry to industry. The dynamic process by which firms and industries evolve over time is shaped by three fundamental factors: technology, scale economies, and demand. Most important, the evidence suggests that it is the differences in the knowledge conditions and technology underlying each specific industry -- key elements in innovation -- that are responsible for the pattern particular to that industry.

First Published in 2000. Routledge is an imprint of Taylor & Francis, an informa company.

Shareholder activism has changed and evolved, most recently prominently manifesting itself in the form of high-profile activist investors. The case studies track the investments each has picked over the previous 10-years and compares holding period returns from the SC 13D filing date. The results vary in scope and depth across the investors, providing insight and commentary on the effectiveness of each investors' involvement in the investments they choose.