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How Does Past Experience Impact Hedge Fund Activism?

Published online by Cambridge University Press:  28 June 2021

Nicole M. Boyson,
Linlin Ma and
Robert M. Mooradian
Nicole M. Boyson
Affiliation:
Northeastern University D’Amore-McKim School of Business n.boyson@neu.edu
Linlin Ma*
Affiliation:
Peking University HSBC Business School
Robert M. Mooradian
Affiliation:
Northeastern University D’Amore-McKim School of Business r.mooradian@neu.edu
*
linlin.ma@phbs.pku.edu.cn (corresponding author)
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Abstract

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Hedge fund activists transfer relevant prior work experience to their activism campaigns. Categorizing activists based on past employment at investment banks (generalists), private equity or special situations partnerships (specialists), or other firms (nonfinancial experts), we relate activists’ prior work experience to their choices and outcomes. Both generalists with codifiable skills and specialists with tacit skills contribute to successful outcomes, but differences in these skills lead to differences in activism processes. Activist choices, market responses, target firm responses, and procedural aspects of activism vary with activist identity. Our analysis examines activists’ heterogeneous skills and highlights their importance in shaping activist interventions.

Information

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 57 , Issue 4 , June 2022, pp. 1279 - 1312
Copyright
© The Author(s), 2021. Published by Cambridge University Press on behalf of the Michael G. Foster School of Business, University of Washington

Footnotes

We thank an anonymous referee, Tobias Carlisle, Jarrad Harford (the editor), and seminar participants at Northeastern University and the University of Connecticut.

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