Abstract

IMPACT OF SHAREHOLDER ACTIVIST ON TARGET COMPANIES

The finance field is very broad with different aspects of the study. Hedge fund activism is one of the sectors that is widely discussed and fundamentally important. My study was based on the need for further understanding of the topic and clarification of the effect that hedge funds have on the affected companies.

Hedge funds use methods such as activist campaigns, proxy fights and wolf pack formation that strengthen them. They bring an external, uncompromising perspective to a company’s “strategic” options. They push companies to make a more disciplined use of cash and capital and

also act on the incontrovertible premise that shareholders are the “owners” of the company and therefore their interests should take precedence in the management of the company. Shareholder activists mostly target smaller companies because they are easier to attack and it may be easier to take advantage of them unlike large companies. However, there have been recent cases where Hedge funds have been bold and attacked large companies including Apple, Uber and Herbalife. This work is still ongoing and I intend to research deeper and into more specific aspects of the topic in the future.