Research

This paper investigates two questions related to activist blockholders: i) What drives their purchase decisions? ii) Is a higher share of activist holdings value increasing? We employ information disclosed in regulatory filings (SEC Schedule 13D) to address these inquiries as follows. The period between the event date (the day the investor reaches the regulatory ownership threshold, also known as trigger date) and the day of its public disclosure (filing date) is referred to as “pre-disclosure accumulation period” or “grace period”. We find that activist investors do indeed use the grace period to adjust their stakes, taking advantage of market-wide price swings. When the market experiences an upward deviation (last quintile) from its trend within the 10 days following the trigger date, initial stakes in dollars are 19% lower. Though activist investors use the pre-disclosure accumulation period strategically, we do not find evidence that this (plausibly exogenous) variation in ownership has an impact on the overall valuation of the firm, at least within the scope of our dataset and specification.

This paper investigates the relationship between company valuations after being targeted by blockholder activists when their stated investment objectives exhibit some degree of similarity to Sustainable Development Goals (SDGs) as developped by the UN. Our empirical approach employs Natural Language Processing (NLP) to establish similarity scores from the textual content of activist regulatory filings (investment objectives) and the SDGs. We find a robust positive relationship that is both economically and statistically significant. Switching from no similarity to the average similarity increases the abnormal returns around the filing date of an activist investor by approximately 2%, about one fifth of the average abnormal return. These findings imply that activist investors may play a crucial rule in the transition towards a more sustainable economy.

Blockholder activism is characterized by large shareholders with a declared intention to exert influence in corporate decision-making. Researchers have frequently used blockholder activist events as a means to investigate a variety of topics in Corporate Finance. While regulatory filings, the primary source of data, are publicly available, the process of extracting a suitable events dataset, one that exclusively includes instances in which an external investor targets a company with the intent to exert influence on its business, lacks thorough documentation, making it unfeasible to be reliably reproduced. In this paper, we discuss key considerations for using public data to compile an activist dataset that identifies non-core activist blockholder events. Furthermore, we investigate the consequences of failing to exclude these non-core events on two common research outcomes: short-term abnormal returns and ownership stakes. This work represents an initial step toward establishing a fully reproducible process for dataset assembly, potentially reducing barriers to future research in this field.