External Monitoring and Returns to Hedge Fund Activist Campaigns

Voice and Action: Sell-Side Analysis and Hedge Fund Activism

“…We show that the activities of sell-side analysts are different for target firms before hedge fund activism occurs. The reduced coverage of sell-side analysts after hedge fund intervention is consistent with the view of substitute monitoring between sell-side analysts and buy-side institutions (Flugum and Souther 2018). In particular, sell-side analyst reports contain more terms related to subsequent activism and are correlated with activism outcomes (i.e.…”