Dancing With Activists

This discussion paper was prepared for publication in the Journal of Financial Economics. We have benefitted from the comments of Manuel Adelino, Amil Dasgupta, Veljko Fotak, Oliver Hart, Scott Hirst and participants in the 2015 FMA International Consortium on Activist Investors, Corporate Governance and Hedge Funds in London, the 2015 FMA International meeting in Helsinki, and workshops at Harvard, INSEAD, NYU, and Maastricht University. We are especially indebted to an anonymous referee for many valuable suggestions. We also wish to thank Brady Baldwin, Seung Hwan Bang, Vlad Bouchouev, Hannah Clark, Ahmet Degerli, Timothy Goh, Robert Holowka, Wenyin Huang, Kirti Kamboj, Kobi Kastiel, Zheng Li, Cong Liu, Yaron Nili, John Rady, Qingrong Ruan, June Rhee, Ruoxi Tian, Jun Xu, Jiaqi Yang, Zilan Yang, Kailei Ye, and Lu Zheng for their excellent research assistance. Finally, we are also grateful to many practitioners affiliated with the Harvard Law School Program on Corporate Governance, including senior proxy solicitors, investment bankers, and hedge fund officers, for helpful discussions about activist settlements. Financial support was provided by the INSEAD Corporate Governance Centre, Columbia Business School, Duke, and Harvard Law School. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.

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