Importing activists: Determinants and consequences of increased cross-border shareholder activism

Does Shareholder Activism Create Value? A Meta-Analysis

“…Our research complements a recent paper by Maffett et al (2022) who examine shareholder activism with the use of a large international sample and exploit differences in the institutional framework. They construct an index that captures the transparency of firm-level governance processes and document a higher incidence of shareholder activism in settings where it is high.…”

“…The Investor Forum, founded in 2014 by UK institutional investors, is explicitly intended to serve "as an 'escalation mechanism' when firms ignore individual investors or exhibit problems that worry many shareholders" (The Economist, 2018). Shareholder activism may thus create value by initiating efficiency improvements, such as refocusing on profitable activities and reduced "empire-building" (Brav et al, 2008a(Brav et al, , 2018Klein & Zur, 2009;Bebchuk et al, 2015;Becht et al, 2017;Brochet et al, 2021;Maffett et al, 2022) and by improving tax efficiency (Cheng et al, 2012). Kang et al (2022) observe that appointing independent directors nominated by activists tends to be associated with increases in firm value.…”

“…Thus, to prevent becoming an activism target, managers may prioritize high current dividend payouts over investments. Activism may thus stifle innovation by reducing research and development (R&D) and other investments that generate long-term value (Bourveau & Schoenfeld, 2017;Maffett et al, 2022). Ordóñez-Calafi & Bernhardt (2022) argue that in some settings, the costs of the reduced investment may outweigh the benefits of managerial disciplining.…”

“…A meta-analysis represents an effective way of estimating the "true effect" in settings where there is an extensive pool of prior estimates based on different data samples and estimated using various methodologies (Stanley & Doucouliagos, 2012;Habersang et al, 2019). Systematic coverage of activism campaigns differs across jurisdictions and over time (Becht et al, 2017;Maffett et al, 2022), which makes it challenging for researchers to comprehensively cover the phenomenon. Data on the impact of shareholder activism are scattered, and many primary studies use diverse and often fairly small data sets.…”

Dividend Policy in Firms Listed at the Nairobi Securities Market: Does Shareholder Activism Matter?

“…The board of directors decides on policies governing shareholders' distribution and composition, consequently managing their activism. According to Maffett et al (2020), shareholder activism leads to a high dividend payout. This study used cross-border activism and was motivated by the global nature of shareholder activism.…”