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Shareholders versus stakeholders in investor activism: Value for whom?

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  • Aslan, Hadiye

Abstract

Is reduction in supplier costs a significant channel for value creation by activist investors? Using a comprehensive sample of shareholder activism during 1994–2015, and addressing endogeneity concerns, we find significant economics effects on the profits and capital investment of the target's suppliers after intervention. Consistent with the predictions of the incomplete contracting and bargaining literatures, factors that weaken (strengthen) the bargaining power of suppliers relative to targets amplify (dilute) the spillover effects on suppliers. The results are robust to the alternative hypotheses of latent industry effects on suppliers and stock picking by activist investors.

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  • Aslan, Hadiye, 2020. "Shareholders versus stakeholders in investor activism: Value for whom?," Journal of Corporate Finance, Elsevier, vol. 60(C).
    • Handle: RePEc:eee:corfin:v:60:y:2020:i:c:s0929119918306746
    DOI: 10.1016/j.jcorpfin.2019.101548
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    Cited by:

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    3. Swanson, Edward P. & Young, Glen M. & Yust, Christopher G., 2022. "Are all activists created equal? The effect of interventions by hedge funds and other private activists on long-term shareholder value," Journal of Corporate Finance, Elsevier, vol. 72(C).

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    More about this item

    Keywords

    Shareholder activism; Supply chain; Incomplete contracts; Bargaining;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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