Spurned CEOs may become activist shareholders
University of Texas at AustinPeer-Reviewed Publication
New research finds that activist campaigns by quasi-insiders -- former CEOs, directors, or founders, who left the target company for various reasons but still own an ample amount of stock -- are both surprisingly common and surprisingly effective.
Campaigns are common. Between 1995 and 2021, 327 quasi-insiders took part in some 280 public campaigns.
Quasi-insiders are high up. Of the 327, about 38% were former CEOs, 30% company founders, and 21% former directors.
Campaigns often succeed. Of the campaigns, 43% achieved their main objective, such as gaining control of the target company’s board of directors. Cohn calls this rate “strikingly high.”
Wall Street approves. Stock prices of the target companies saw short-term boosts, with a mean increase of 3.9% from a day before the campaign announcement to 10 days after.
- Journal
- The Review of Corporate Finance Studies