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Boardroom Brawls and Stock Surges: The Comedy of Shareholder Activism

Rippe, Ludvig LU and Ragnartz, Carl LU (2024) NEKH02 20241
Department of Economics
Abstract
This thesis examines the impact of shareholder activism on the annual stock returns of targeted companies. Utilizing a dataset of activist campaigns from the FactSet SharkWatch 50 database, covering the period from 2005 to 2021, we investigate whether the presence of activist investors leads to enhanced stock performance. Our empirical analysis, employing an event study design, reveals a significant positive effect of activist ownership on annual returns, with an average increase of approximately 6.14%. This effect is most pronounced in the year following the announcement year of the activist campaign, showing an increase in returns by around 14.55%. Interestingly, our findings indicate that neither any degree of activism nor board... (More)
This thesis examines the impact of shareholder activism on the annual stock returns of targeted companies. Utilizing a dataset of activist campaigns from the FactSet SharkWatch 50 database, covering the period from 2005 to 2021, we investigate whether the presence of activist investors leads to enhanced stock performance. Our empirical analysis, employing an event study design, reveals a significant positive effect of activist ownership on annual returns, with an average increase of approximately 6.14%. This effect is most pronounced in the year following the announcement year of the activist campaign, showing an increase in returns by around 14.55%. Interestingly, our findings indicate that neither any degree of activism nor board representation by activists significantly leads to excess returns beyond the overall effect of shareholder activism. This suggests that while activist involvement generally boosts stock performance, the specific strategies activists employ may not be the driving factor behind these gains. These results contribute to the broader literature on shareholder activism by providing a more recent perspective on its financial impact and highlighting areas for future research, including the long-term effects of activism and the qualitative aspects of activist strategies. (Less)
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author
Rippe, Ludvig LU and Ragnartz, Carl LU
supervisor
organization
course
NEKH02 20241
year
type
M2 - Bachelor Degree
subject
keywords
Hedge Fund Activism, Shareholder Activism, Activist Campaigns
language
English
id
9156972
date added to LUP
2024-09-24 09:00:12
date last changed
2024-09-24 09:00:12
@misc{9156972,
  abstract     = {{This thesis examines the impact of shareholder activism on the annual stock returns of targeted companies. Utilizing a dataset of activist campaigns from the FactSet SharkWatch 50 database, covering the period from 2005 to 2021, we investigate whether the presence of activist investors leads to enhanced stock performance. Our empirical analysis, employing an event study design, reveals a significant positive effect of activist ownership on annual returns, with an average increase of approximately 6.14%. This effect is most pronounced in the year following the announcement year of the activist campaign, showing an increase in returns by around 14.55%. Interestingly, our findings indicate that neither any degree of activism nor board representation by activists significantly leads to excess returns beyond the overall effect of shareholder activism. This suggests that while activist involvement generally boosts stock performance, the specific strategies activists employ may not be the driving factor behind these gains. These results contribute to the broader literature on shareholder activism by providing a more recent perspective on its financial impact and highlighting areas for future research, including the long-term effects of activism and the qualitative aspects of activist strategies.}},
  author       = {{Rippe, Ludvig and Ragnartz, Carl}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Boardroom Brawls and Stock Surges: The Comedy of Shareholder Activism}},
  year         = {{2024}},
}