Do Shareholder Activism Announcements Affect Stock Prices? A Meta-Analysis

We conduct a meta-analysis of 1,973 estimates of stock price responses to shareholder activism obtained from 67 primary studies. We find that the estimates of stock price reactions, adjusted for publication selection bias, range from 0% to 1.5%. We observe stronger stock price responses in environments where shareholder rights are better protected and where stock markets are smaller relative to the size of the economy. In addition, stock prices respond more positively to activism exercised by individual investors, activism conducted through more confrontational approaches, activism aimed at selling the target company, and activism successful in achieving its objectives. Estimates based on longer measurement periods, simpler approaches to risk adjustment, and more recent and longer data sets, and estimates published in more reputable academic journals tend to be higher. Our results provide insights for regulators in designing an optimal regulatory framework and for researchers in choosing an appropriate research design to measure the impact of shareholder activism.