Returns to Shareholder Activism.
This article reports a unique analysis of private engagements by an activist fund. It is based on data made available to us by Hermes, the fund manager owned by the British Telecom Pension Scheme (BTPS), on engagements with management in companies targeted by its U.K. Focus Fund (HUKFF). In contrast...
| Main Authors: | , , , |
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| Format: | Working paper |
| Language: | English |
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Oxford Finance
2008
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| _version_ | 1797083250166857728 |
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| author | Becht, M Franks, J Mayer, C Rossi, S |
| author_facet | Becht, M Franks, J Mayer, C Rossi, S |
| author_sort | Becht, M |
| collection | OXFORD |
| description | This article reports a unique analysis of private engagements by an activist fund. It is based on data made available to us by Hermes, the fund manager owned by the British Telecom Pension Scheme (BTPS), on engagements with management in companies targeted by its U.K. Focus Fund (HUKFF). In contrast with most previous studies of activism, we report that the fund executes shareholder activism predominantly through private interventions that would be unobservable in studies purely relying on public information. The fund substantially outperforms benchmarks and we estimate that abnormal returns are largely associated with engagements rather than stock picking. We categorize the engagements and measure their impact on the returns of target companies and the fund. We find that Hermes frequently seeks and achieves significant changes in the company’s strategy including refocusing on the core business and returning cash to shareholders, and changes in the executive management including the replacement of the CEO or chairmen. |
| first_indexed | 2024-03-07T01:39:04Z |
| format | Working paper |
| id | oxford-uuid:9634052b-81e4-4717-aca2-57ef0b0afdf2 |
| institution | University of Oxford |
| language | English |
| last_indexed | 2024-03-07T01:39:04Z |
| publishDate | 2008 |
| publisher | Oxford Finance |
| record_format | dspace |
| spelling | oxford-uuid:9634052b-81e4-4717-aca2-57ef0b0afdf22022-03-26T23:51:27ZReturns to Shareholder Activism.Working paperhttp://purl.org/coar/resource_type/c_8042uuid:9634052b-81e4-4717-aca2-57ef0b0afdf2EnglishDepartment of Economics - ePrintsOxford Finance2008Becht, MFranks, JMayer, CRossi, SThis article reports a unique analysis of private engagements by an activist fund. It is based on data made available to us by Hermes, the fund manager owned by the British Telecom Pension Scheme (BTPS), on engagements with management in companies targeted by its U.K. Focus Fund (HUKFF). In contrast with most previous studies of activism, we report that the fund executes shareholder activism predominantly through private interventions that would be unobservable in studies purely relying on public information. The fund substantially outperforms benchmarks and we estimate that abnormal returns are largely associated with engagements rather than stock picking. We categorize the engagements and measure their impact on the returns of target companies and the fund. We find that Hermes frequently seeks and achieves significant changes in the company’s strategy including refocusing on the core business and returning cash to shareholders, and changes in the executive management including the replacement of the CEO or chairmen. |
| spellingShingle | Becht, M Franks, J Mayer, C Rossi, S Returns to Shareholder Activism. |
| title | Returns to Shareholder Activism. |
| title_full | Returns to Shareholder Activism. |
| title_fullStr | Returns to Shareholder Activism. |
| title_full_unstemmed | Returns to Shareholder Activism. |
| title_short | Returns to Shareholder Activism. |
| title_sort | returns to shareholder activism |
| work_keys_str_mv | AT bechtm returnstoshareholderactivism AT franksj returnstoshareholderactivism AT mayerc returnstoshareholderactivism AT rossis returnstoshareholderactivism |