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Does Coordinated Institutional Investor Activism Reverse the Fortunes of Underperforming Firms?

Published online by Cambridge University Press:  06 April 2009

Wei-Ling Song  and
Samuel H. Szewczyk
Wei-Ling Song
Affiliation:
[email protected], LeBow College of Business, Drexel University, Philadelphia, PA 19104
Samuel H. Szewczyk
Affiliation:
szewczsh@drexel. edu, LeBow College of Business, Drexel University, Philadelphia, PA 19104.
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Abstract

We investigate the impact of Focus Listing by the Council of Institutional Investors on targeting poorly performing firms. Post-listing stock returns for the targeted firms differ insignificantly from those of a suitable benchmark group. Institutional investors increase their holdings of targeted firms, but not by more than those of the benchmark firms. Similarly, though analysts revise earnings forecasts up for Focus Listed firms, they do so well after the listing event and positive revisions are no greater than the benchmark group. Moreover, there appears to be little difference between Focus List and benchmark firms in the incidence of post-listing events such as mergers and stock repurchases. Overall, we find very little evidence of the efficacy of shareholder activism.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 38 , Issue 2 , June 2003 , pp. 317 - 336
Copyright
Copyright © School of Business Administration, University of Washington 2003

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