Research
Research
"Shareholder activism: Blessing or affliction for incumbent CEOs?" (with Jana P. Fidrmuc and Jesus Gorrin)
Abstract: We examine CEO career consequences following shareholder activism in their companies. Using the control function approach, we find limited evidence that it is shareholder activism that causes CEO career prospects to deteriorate post activism. We show that the result has to do with endogeneity in activist target selection; targeted CEOs would have been replaced even without activists’ intervention. Moreover, considering hostility on both sides of the campaign, we show that CEO resistance to activism improves targeted CEOs’ career prospects when activists decide not to go hostile. Campaigns involving hedge funds versus other activists exhibit more negative career consequences, but this effect is significantly mitigated for resistant CEOs. We also find a disciplinary effect of shareholder activism on targeted CEOs’ board positions, but only when activists are hostile.
"Shareholder activism and gender bias" (with Jana P. Fidrmuc and Jesus Gorrin)
Abstract: This study uses US shareholder activism data to show that shareholder activists are significantly more likely to target female rather than male CEOs. We use both matching and an instrumental variable approach to provide evidence of the difference in targeting. Concerning campaign differences, campaigns targeting firms with female CEOs are more likely to aim for board representation rather than value maximization or other goals. We also find that female-CEO campaigns are more hostile, and the high hostility leads to a higher propensity for activists to ask for reimbursement. We do not find gender differences in the market reaction to activist 13D filings, in post-campaign firm performance, or merger activity. In addition, targeted female CEOs have better managerial observable characteristics than targeted male CEOs. We show some evidence of activist learning.
"Does the market reward monitors?"
Abstract: Using a unique and comprehensive hand-collected sample of activist-nominated directors (i.e., directors appointed to the board in response to activist demands), this paper examines the attributes and career outcomes of these directors. The group of activist directors is dominated by young men who possess less board and executive experience than target board members, but are more experienced and better educated than other individuals in the director labor pool. The employment outcomes suggest that activist directors on average are rewarded by the labor market. Compared to their nonactivist colleagues, activist directors are more likely to retain their current seats and gain more new seats following the campaigns.
Work in Progress
"Shareholder activism and vertical bargaining power" (with Jana P. Fidrmuc and Danmo Lin)
Abstract: This study investigates the role of customer–supplier relationships in the emergence of shareholder activism. We find that having one or more dependent suppliers raises a firm’s probability of becoming an activist target whereas having one or more principal customers does not have any statistically significant effect. Further, by exploiting the dynamics of customer-supplier relationships, we establish that target firms increase their reliance on dependent suppliers but decrease their reliance on principal customers after activism. Finally, we do not find statistically significant differences in the market reaction or operating performance between firms with and without significant customer–supplier relationships.