Hostile Resistance To Hedge Fund Activism
Nicole M. Boyson
Northeastern University – D’Amore-McKim School of Business
Pegaret Pichler
Northeastern University, D’Amore-McKim School of Business, Finance Area
Bonhoeffer Fund's performance update for the month ended July 31, 2022. Q2 2022 hedge fund letters, conferences and more The Bonhoeffer Fund returned 3.5% net of fees in July, for a year-to-date return of -15.8%. Bonhoeffer Fund, LP, is a value-oriented private investment partnership for . . . SORRY! This content is exclusively for Read More
July 6, 2016
Abstract:
Target firms openly resist hedge fund activists about one-fourth of the time, via poison pills, lawsuits, and restrictions on shareholder actions. Target firm resistance is met with a significantly negative market reaction, reducing the initial positive reaction to activism announcement. Unless hedge funds counter-resist with a proxy fight or lawsuit, targets are less likely to accede to hedge fund demands, be acquired, or experience improved long-term operating performance compared to non-resisting targets of the same hedge funds. By contrast, when hedge funds counter-resist, target firm outcomes do not differ relative to non-resisting targets of the same hedge funds.