Article | Journal of Financial Economics

Investor Activism and Takeovers

by Robin Greenwood and Michael Schor


Recent work documents large positive abnormal returns around the time that a hedge fund announces its activist intentions with a publicly listed firm. We show that these returns are largely explained by the ability of activists to force target firms into a takeover: In a comprehensive sample of 13D filings by portfolio investors between 1993 and 2006, we find that announcement returns and long-term abnormal returns are high for the subset of targets that are acquired ex-post, but not detectably different from zero for firms that remain independent eighteen months after the initial filing. We show that firms that are targeted by activists are more likely to get acquired than those in a control sample. Finally, we show that the portfolios managed by activist investors perform poorly during a period in which market-wide takeover interest declined.

Keywords: Mergers and Acquisitions; Private Equity; Investment Return; Investment Activism; Investment Portfolio; Public Ownership;


Greenwood, Robin, and Michael Schor. "Investor Activism and Takeovers." Journal of Financial Economics 92, no. 3 (June 2009): 362–375.