Abstract
Presented at the Annual Meeting of the Center for Corporate Governance, Conference Board of New York, on November 14th, 2014. The presentation is following the publication of two papers by the Institute for Governance of Private and Public Organizations answering the question “Does hedge fund activism create long-term shareholder value?” In the presentation, the question is rephrased to consider whether activist hedge funds are making corporations better for all stakeholders. Thus, a definition of corporate short-termism is provided, and evidence and causes of short-termism are explored. The “soft” activism of institutional investors and the “hard” activism of hedge funds are contrasted. The impact of hedge fund activism is set forth, and a critical review of academic studies purporting to demonstrate the favorable long term effects is presented. Finally, different measures to curtail the influence of these activists are explored.
Published Version
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