Activist Hedge Funds: Beware the New Titans

Abstract

Deploying more than $65 billion in capital globally and with more than 900 campaigns in 2018, activist hedge funds represent “the activist” in the capital market and are having a significant influence on corporate governance and strategy and even the ownership of companies. While finance scholars have focused on understanding what firms they target and the performance repercussions of their campaigns, management scholars have largely ignored this important constituent. Based on our extensive research on the context of hedge fund activism we provide a research agenda that articulates the opportunities for management scholars to conduct research on this important phenomenon. By shedding light on the dynamics of hedge fund activism, management scholars have the opportunity to provide greater clarity as to whether these activists are shareholder champions or whether they undermine the long-term strategic health of companies.