Activist investing
Lilja, Tuomas (2024-06-07)
T. Lilja
07.06.2024
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:oulu-202406074284
https://urn.fi/URN:NBN:fi:oulu-202406074284
Tiivistelmä
The study concentrates on observing shareholder activism as a phenomenon and answering the research questions: What type of different activist investor styles are there and how they engage with the target company, and: How activist interventions influence the stock performance of the target company.
Only the most aggressive activists were found to pursue goals related to sale of the company or its main assets, gaining control of the company, or buying it out and taking it private. Additionally, friendlier objectives like general shareholder maximization or strategy steering and capital allocation were found in friendly and midfield groups, but not from aggressive. Also, friendly and aggressive activists could have similar objective identification numbers, but the severity of actions and interpretation of the objective would wary drastically based on aggressiveness. Based on the findings, a positive correlation between aggressiveness and objectives was found, where aggressive activists have more aggressive or ambitious goals than the friendly ones.
Only the most aggressive activists engage to tackle multiple agency theory related problems. In addition, the two main agency theory’s problems: aligning of interests and solving the monitoring, were found in all groups, showing that the level off aggressivity doesn’t guide or line out which theoretical problem the activist campaign is based on. Aspects of principal-principal conflict were only found in the most aggressive activist cases.
All groups scored positive excess returns against benchmark index in average and median in medium- term. The observation could mean that when activism goes right, the strategy has significant potential to beat the overall market returns in a medium-term time window.
The aggressive group of activists performed better in medium-term excess returns compared to the friendly group. Especially in median excess returns, the results pointed to a positive correlation between the level of aggressivity and excess returns generated during an activist intervention in medium-term. When it came to short-term returns, no clear pattern could be drawn. However, the aggressive group scored negative stock returns in the short-term in average and median terms, which could be due to expectations of costly proxy fights and management’s decreased focus in ordinary management duties.
Only the most aggressive activists were found to pursue goals related to sale of the company or its main assets, gaining control of the company, or buying it out and taking it private. Additionally, friendlier objectives like general shareholder maximization or strategy steering and capital allocation were found in friendly and midfield groups, but not from aggressive. Also, friendly and aggressive activists could have similar objective identification numbers, but the severity of actions and interpretation of the objective would wary drastically based on aggressiveness. Based on the findings, a positive correlation between aggressiveness and objectives was found, where aggressive activists have more aggressive or ambitious goals than the friendly ones.
Only the most aggressive activists engage to tackle multiple agency theory related problems. In addition, the two main agency theory’s problems: aligning of interests and solving the monitoring, were found in all groups, showing that the level off aggressivity doesn’t guide or line out which theoretical problem the activist campaign is based on. Aspects of principal-principal conflict were only found in the most aggressive activist cases.
All groups scored positive excess returns against benchmark index in average and median in medium- term. The observation could mean that when activism goes right, the strategy has significant potential to beat the overall market returns in a medium-term time window.
The aggressive group of activists performed better in medium-term excess returns compared to the friendly group. Especially in median excess returns, the results pointed to a positive correlation between the level of aggressivity and excess returns generated during an activist intervention in medium-term. When it came to short-term returns, no clear pattern could be drawn. However, the aggressive group scored negative stock returns in the short-term in average and median terms, which could be due to expectations of costly proxy fights and management’s decreased focus in ordinary management duties.
Kokoelmat
- Avoin saatavuus [34150]