The surprising market response to activist hedge funds

Posted 5.4.2015

The surprising market response to activist hedge funds

C.N.V. Krishnan"The Surprising Market Response to Activist Hedge Funds" by Frank Partnoy, published in The Wall Street Journal's Commentary section cites research by C.N.V. Krishnan, PhD and professor of banking and finance at Weatherhead School of Management.

The joint research between Krishnan, Partnoy (professor of law and finance at the University of San Diego School of Law) and Randall Thomas of Vanderbilt University studied 1,262 interventions by hedge-fund activites since 2008 and found that stock prices for the targeted companies rose soon after. The market appears to be reacting favorably to activism, says Partnoy.

The opinion piece concludes with a response to the question, "Are activist hedge funds good or bad?" Partnoy says, "For managers and board members of public companies, they are potentially bad. They challenge those individuals' wisdom, their strategies and even their positions in the company. But for most investors, many of these activist funds—though not all—are good."


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