Returns to Hedge Fund Activism: An International Study

TLDR

The study examines the incidence, characteristics, and performance of hedge fund activism across multiple countries. The authors analyze 1,740 activist engagements in 23 countries, noting that nearly a quarter involve multiple activists targeting the same firm. Activism is most common where institutional ownership is high, especially in the U.S., and multi‑activist campaigns outperform single ones, though outcomes differ by country, with Japan showing high expectations but low results. Received March 3 2015; accepted December 21 2016 by Editor Andrew Karolyi.

Abstract

This paper provides evidence on the incidence, characteristics, and performance of activist engagements across countries. We find that the incidence of activism is greatest with high institutional ownership, particularly for U.S. institutions. We use a sample of 1,740 activist engagements across 23 countries and find that almost one-quarter of engagements are by multi-activists engaging the same target. These engagements perform strikingly better than single activist engagements. Engagement outcomes, such as board changes and takeovers, vary across countries and significantly contribute to the returns to activism. Japan is an exception, with high initial expectations and low outcomes. Received March 3, 2015; editorial decision December 21, 2016 by Editor Andrew Karolyi.