Let's talk sooner rather than later: The strategic communication decisions of activist blockholders
Document Type
Article
Date of Original Version
6-1-2020
Abstract
When starting their campaigns, activist investors face the decision of when to begin communication with the management of the target firm. We document how the choice to start communication early with management, before the 13D disclosure, fits within the campaign's overall strategy. Nearly a quarter of the activist campaigns in our sample begin with what we call open activism. More credible activists with lower costs of activism are more likely to engage with management early and this early engagement is related to their desire to see specific changes made at the target firm. Eventual actions taken by activists, such as a subsequent merger or proxy contest, as well as the long-run performance of the target, are also related to this initial communication decision. Together, our findings suggest that open activism is an important part of the activist's underlying strategy and that market participants understand this link.
Publication Title, e.g., Journal
Journal of Corporate Finance
Volume
62
Citation/Publisher Attribution
Aiken, Adam L., and Choonsik Lee. "Let's talk sooner rather than later: The strategic communication decisions of activist blockholders." Journal of Corporate Finance 62, (2020). doi: 10.1016/j.jcorpfin.2020.101593.