Working Paper | HBS Working Paper Series | 2016

Consequences to Directors of Shareholder Activism

by Ian D. Gow, Sa-Pyung Sean Shin and Suraj Srinivasan


Using a comprehensive sample for 2004–2012, we examine the impact of shareholder activist campaigns on the careers of directors of targeted firms. We find that activism is associated with directors being almost twice as likely to leave—and performance-sensitivity of turnover being higher over the subsequent two-year period. Our evidence suggests that director turnover occurs even without shareholder activists engaging in, let alone winning, proxy contests and, in contrast to most prior research, director election results matter. Overall, our evidence suggests that shareholder activism, even in the absence of proxy fights, is associated with greater accountability for independent directors.

Keywords: shareholder activism; hedge funds; independent directors; Director reputation; accountability; Shareholder voting; Voting; Retention; Investment Funds; Management Teams; Investment Activism;


Gow, Ian D., Sa-Pyung Sean Shin, and Suraj Srinivasan. "Consequences to Directors of Shareholder Activism." Harvard Business School Working Paper, No. 14-071, February 2014. (Revised May 2016.)