Last summer, and again last autumn, we identified for you some interesting and useful scholarly work on this subject, in our annotated bibliography, with comments on our blog. The bibliography has links to the published or working papers (fee for published papers, sorry). The major papers report excess equity returns ranging from 7% to almost 22%.

Since our last update, many new papers have appeared. Three newer ones merit a review.

Two studies address the cost of activist investing, specifically the effectiveness of shareholder resolutions, which don't require an expensive proxy solicitation process:

• Finance professor Febrizio Ferri analyzes "low-cost" activist investing through a review of shareholder proposals and votes in uncontested director elections. He concludes, "low-cost activism has become a more powerful tool, capable of driving governance changes at target firms, promoting market-wide adoption of governance practices, and influencing key policy reforms."
• Similarly, professors Doron Levit and Nadya Malenko also analyze the impact of shareholder proposals.

This work adds nicely to our analysis of low-cost activism, which we set forth in "Effective Activism, on the Cheap".

 

A third paper tackles the very interesting subject of what distinguishes effective activist investors. In a comprehensive analysis of the attributes of different types of activist investors, Nicole M. Boyson and Robert M. Mooradian conclude that more frequent activists do better than less frequent ones.

 

We've added these to the bibliography, with links to these and the previous papers.

For further information, or to discuss a specific turnaround situation, please contact:

Michael R. Levin
m.levin@theactivistinvestor.com
847.830.1479