This study is conducted as a part of the Project "Frontiers in Corporate Governance Analysis" und... more This study is conducted as a part of the Project "Frontiers in Corporate Governance Analysis" undertaken at theResearch Institute of Economy, Trade and Industry (RIETI). We would like to thank Toshi Oguchi and YoshiMaeda of Governance for Owners Japan and Peter Butler, Chairman of GO Investment Partners Group (GOP) andPaola Perotti, formerly Managing Director of GOP, for their generosity in providing their stewardship data and forhelpful comments on our earlier draft. We also wish to thank Vikas Mehrotra, participants at ICGN TokyoConference in July 2019 and WIAS-RIETI-ECGI conference in November 2019 for their helpful comments.
The paper analyzes 362 European activist interventions by hedge funds, focus funds and other acti... more The paper analyzes 362 European activist interventions by hedge funds, focus funds and other activist investors from 2000 to 2008. The sample includes both public and private interventions. The private interventions are based upon proprietary data collected from fi ve activist funds. For public interventions the disclosure of acquired stakes is associated with large positive abnormal returns across a number of jurisdictions. Private activism is extensive and profi table but less so than public activism, in large part because the incidence of takeovers is higher in public activism. The returns from hostile activist interventions are more profi table than cooperative ones, and returns for specialist activist funds are substantially larger than for other investors. After controlling for these factors legal jurisdiction does not explain differences in returns across countries.
This paper examines four different daily datasets of hedge fund return indexes: MSCI, FTSE, Dow J... more This paper examines four different daily datasets of hedge fund return indexes: MSCI, FTSE, Dow Jones and HFRX, all based on investable hedge funds, and three different monthly datasets of hedge fund return indexes: CSFB, CISDM and HFR which comprise both investable and non-investable hedge funds. Our study, based on standard statistical analysis, non-parametric analysis of the distribution and non-parametric regressions with respect to the S&P500 index shows that key data biases and disparate index construction methodologies lead to different statistical properties of hedge fund databases. One key variable that highly affects the statistical properties of hedge fund index returns is the "investability" of hedge funds.
Standard Investments and previously at Standard Life Investments) for patiently answering our que... more Standard Investments and previously at Standard Life Investments) for patiently answering our questions and providing data. Guy Jubb provided invaluable insights from the time he headed the SLI governance and stewardship group. ASI provided confidential data and had the right to read and comment on drafts of this paper before publication. One of the authors declares that he is currently a holder of Standard Life Aberdeen shares, purchased during the 2006 demutualisation.
This paper provides evidence on the incidence, characteristics, and performance of activist engag... more This paper provides evidence on the incidence, characteristics, and performance of activist engagements across countries. We find that the incidence of activism is greatest with high institutional ownership, particularly for U.S. institutions. We use a sample of 1,740 activist engagements across 23 countries and find that almost one-quarter of engagements are by multi-activists engaging the same target. These engagements perform strikingly better than single activist engagements. Engagement outcomes, such as board changes and takeovers, vary across countries and significantly contribute to the returns to activism. Japan is an exception, with high initial expectations and low outcomes. (JEL G32)
Good evening, I'm Laura Tyson, Dean of the London Business School, and it's my pleasure to welcom... more Good evening, I'm Laura Tyson, Dean of the London Business School, and it's my pleasure to welcome you to this event. We have a very important topic: shareholder activism in the U.K. I also want to note that this is the inaugural event for the new London Business School Center for Corporate Governance. I've worked very hard with many people in this room-particularly with the inspired leadership of Professor Julian Franks and Paul Coombes-to launch this Center, which has been made possible by generous support from Oracle, Freshfields, and Prudential. Let me also mention that tonight's event is being offered through a partnership of our new Center with the European Corporate Governance Institute and the Journal of Applied Corporate Finance, which is a publication of Morgan Stanley. So we have some great sponsors and a great topic. Our program tonight has two parts. In the first, Julian Franks and Marco Becht will provide an overview of the findings of an independent study-conducted by Julian, Marco, Colin Mayer, and Stefano Rossi-that documents the success of a venture into shareholder activism by a U.K. pension fund. Starting in 1998, the U.K. investment firm Hermes, which manages assets on behalf of the BT Pension Scheme, created a Focus Fund whose mission has been to identify underperforming companies, communicate problem areas and recommended solutions to their managements and boards, and then work with the companies to bring about the proposed changes. The actions of the Fund appear to have been remarkably successful, both in bringing about change and in increasing share values. And after
... Julian Franks London Business School Centre for Corporate Governance, CEPR and ECGI Colin May... more ... Julian Franks London Business School Centre for Corporate Governance, CEPR and ECGI Colin Mayer Saïd Business School, University of Oxford, CEPR and ECGIStefano Rossi Stockholm School of Economics 4 August 2007 ...
This paper provides evidence on the incidence, characteristics, and performance of activist engag... more This paper provides evidence on the incidence, characteristics, and performance of activist engagements across countries. We find that the incidence of activism is greatest with high institutional ownership, particularly for U.S. institutions. We use a sample of 1,740 activist engagements across 23 countries and find that almost one-quarter of engagements are by multi-activists engaging the same target. These engagements perform strikingly better than single activist engagements. Engagement outcomes, such as board changes and takeovers, vary across countries and significantly contribute to the returns to activism. Japan is an exception, with high initial expectations and low outcomes. (JEL G32)
This paper examines four different daily datasets of hedge fund return indexes: MSCI, FTSE, Dow J... more This paper examines four different daily datasets of hedge fund return indexes: MSCI, FTSE, Dow Jones and HFRX, all based on investable hedge funds, and three different monthly datasets of hedge fund return indexes: CSFB, CISDM and HFR which comprise both investable and non-investable hedge funds. Our study, based on standard statistical analysis, non-parametric analysis of the distribution and non-parametric regressions with respect to the S&P500 index shows that key data biases and disparate index construction methodologies lead to different statistical properties of hedge fund databases. One key variable that highly affects the statistical properties of hedge fund index returns is the "investability" of hedge funds.
Standard Investments and previously at Standard Life Investments) for patiently answering our que... more Standard Investments and previously at Standard Life Investments) for patiently answering our questions and providing data. Guy Jubb provided invaluable insights from the time he headed the SLI governance and stewardship group. ASI provided confidential data and had the right to read and comment on drafts of this paper before publication. One of the authors declares that he is currently a holder of Standard Life Aberdeen shares, purchased during the 2006 demutualization.
Standard Investments and previously at Standard Life Investments) for patiently answering our que... more Standard Investments and previously at Standard Life Investments) for patiently answering our questions and providing data. Guy Jubb provided invaluable insights from the time he headed the SLI governance and stewardship group. ASI provided confidential data and had the right to read and comment on drafts of this paper before publication. One of the authors declares that he is currently a holder of Standard Life Aberdeen shares, purchased during the 2006 demutualisation.
This paper is based upon a study that was sponsored by the DTI/Treasury Working Group on Company ... more This paper is based upon a study that was sponsored by the DTI/Treasury Working Group on Company Rescue Mechanisms. We are grateful to all members of the working party for their many helpful suggestions both in the design of this study and its execution. We are grateful to three banks, who wish to remain anonymous, for their invaluable assistance in making data available, assisting us in the collection of the data, and providing interviews with many of their managers in the rescue and business support services. We are grateful to John Thirlwell of the British Bankers Association for coordinating the arrangements with the banks. Sergey Sanzhar and Stefano Rossi provided excellent research assistance. The paper has been presented at the JFE sponsored conference at the Tuck School at Dartmouth, in July 2000 and at the American Finance Association Meetings in New York in 2001. We are grateful for comments by our discussant Douglas Baird and other
This paper is the first study of long-run evolution of investor protection, equity financing and ... more This paper is the first study of long-run evolution of investor protection, equity financing and corporate ownership in the U.K. over the 20 century. Formal regulation only emerged in the second half of the century. We assess its influence on finance and ownership by comparing evolution of firms incorporating at different stages of the century. Regulation had little impact on equity issues or dispersion of ownership: even in the absence of regulation, there was a large amount of both, primarily associated with mergers. The main effect of regulation was on share trading and the market for corporate control. These results cast doubt on law and finance theories and suggest financial development in the U.K. relied more on informal relations of trust than on formal systems of regulation. JEL Classification: G32, G34
This study is conducted as a part of the Project "Frontiers in Corporate Governance Analysis" und... more This study is conducted as a part of the Project "Frontiers in Corporate Governance Analysis" undertaken at theResearch Institute of Economy, Trade and Industry (RIETI). We would like to thank Toshi Oguchi and YoshiMaeda of Governance for Owners Japan and Peter Butler, Chairman of GO Investment Partners Group (GOP) andPaola Perotti, formerly Managing Director of GOP, for their generosity in providing their stewardship data and forhelpful comments on our earlier draft. We also wish to thank Vikas Mehrotra, participants at ICGN TokyoConference in July 2019 and WIAS-RIETI-ECGI conference in November 2019 for their helpful comments.
for their helpful comments and suggestions. We wish to thank seminar participants at the Stockhol... more for their helpful comments and suggestions. We wish to thank seminar participants at the Stockholm School of Economics, and INSEAD for their comments and suggestions. We thank the AQR Asset Management Institute at London Business School for their financial support.
A generally accepted view is that sophisticated bankruptcy procedures are required to mitigate co... more A generally accepted view is that sophisticated bankruptcy procedures are required to mitigate coordination failures and fire sale discounts arising from financial distress. In this paper, we study an industry not subject to mandatory bankruptcy procedures; instead, the shipping industry has relied on privately negotiated contracts, and not on sovereign procedures, like the US Chapter 11. We describe how loan contracts, and private institutions including competition between ports, have adapted to mitigate the costs of distress. We find low levels of coordination failures and fire sale discounts of 11% on the sale of arrested ships. Both the direct and indirect costs of distress are no larger than those reported for US bankruptcy procedures.
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