Taking Aim: Corporate Opportunity Structures and Activists' Selection of Corporate Targets

Scholars agree that the tenor of a firms' past interactions with contentious activists--which represent a strong signal of the openness of a firm's opportunity structures--impacts the likelihood that the firm will be targeted in the future. However, there is interesting disagreement in the literature about the direction of this relationship. One body of work suggests that activists select targets that have proven themselves to be receptive to prior challenges, as it is likely these 'easy targets' will concede without requiring activists to expend undue resources. However, another body of work propones that activists are more likely to target the most resistant companies, as these unyielding firms are most likely to provoke the opprobrium necessary to inspire effective mobilization. In this paper, we seek to coalesce these two ostensibly contravening research streams by arguing for a curvilinear effect between a firm's receptivity to past activist challenges and the likelihood of its being targeted. We argue that firms situated at either extreme--those that have proven themselves to be most receptive or most resistant--are most likely to be targeted by activists, whereas more neutral firms are least likely to be targeted. We test this proposition using a longitudinal panel analysis that tracks activist interactions with 300 large firms over a fifteen-year period.