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  • 2016
  • Working Paper
  • HBS Working Paper Series

Consequences to Directors of Shareholder Activism

By: Ian D. Gow, Sa-Pyung Sean Shin and Suraj Srinivasan
  • Format:Print
  • | Language:English
  • | Pages:63
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Abstract

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

Citation

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.)
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About The Author

Suraj Srinivasan

Accounting and Management
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Related Work

    • 2016
    • Faculty Research

    Consequences to Directors of Shareholder Activism

    By: Ian D. Gow, Sa-Pyung Sean Shin and Suraj Srinivasan
Related Work
  • Consequences to Directors of Shareholder Activism By: Ian D. Gow, Sa-Pyung Sean Shin and Suraj Srinivasan
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