Shareholder Activism And Voluntary Disclosure

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Shareholder Activism And Voluntary Disclosure

Shareholder Activism And Voluntary Disclosure

Thomas Bourveau

Hong Kong University of Science & Technology (HKUST)

Jordan Schoenfeld

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University of Utah

October 1, 2015

Abstract:

This paper studies the relation between voluntary disclosure and shareholder activism. We use a unique data set of 1,130 activism events from 2005 to 2011 to construct an empirical model of activism and disclosure. Our findings indicate that when the threat of activism increases, managers respond by increasing disclosure, and these additional disclosures reduce the probability of being targeted by an activist. We interpret these results as evidence that managers strategically influence their firms’ information environments through disclosure to deter activist intervention. This evidence stands in contrast to theoretical governance models that assume that a firm’s information environment is an exogenous force in activism settings.

Shareholder Activism And Voluntary Disclosure – Introduction

“Companies that can articulate their strategy and demonstrate that it is grounded in a well-considered assessment of both their asset portfolios and their capabilities m