Comments on: Hedge Fund Activism, Corporate Governance, and Firm Performance
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Transcript of Comments on: Hedge Fund Activism, Corporate Governance, and Firm Performance
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Comments on:
Hedge Fund Activism, Corporate Governance, and Firm Performance
Dr. Joseph R. MasonDrexel University, The Wharton School, and Federal Deposit Insurance Corporation
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Overall Objective of Paper
Define HF Activism
Identify HF Selections
Measure HF Effects
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Define HF Activism: Wide Variety of HF Strategies
Fundamental Underlying
Information
Capital
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Define HF Activism: Wide Variety of HF Strategies
Fundamental Underlying
Information
Capital
![Page 5: Comments on: Hedge Fund Activism, Corporate Governance, and Firm Performance](https://reader036.fdocuments.us/reader036/viewer/2022072014/56812f66550346895d94f00c/html5/thumbnails/5.jpg)
Define HF Activism: Wide Variety of HF Strategies
Fundamental Underlying
Information
Capital
![Page 6: Comments on: Hedge Fund Activism, Corporate Governance, and Firm Performance](https://reader036.fdocuments.us/reader036/viewer/2022072014/56812f66550346895d94f00c/html5/thumbnails/6.jpg)
Define HF Activism: Wide Variety of HF Strategies
Fundamental Underlying
Information
Capital
Regulatory Arbitrage
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Regulatory Arbitrage: Hedge Fund Voting
Is this activism by BJPT
definition?
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Identifying HF Selections
Selection is partially the firm, but also the level of activism.
Category 1, “Communicate with board/management…”
Category 7, HF “intends to take full control…” Many ways to econometrically differentiate
levels of activism. GIM 2003 QJE
Selection bias (with truncation): Only see those that HF invest in beyond threshold.
Partial observability bias: Don’t see rejected investment opportunities.
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Measure HF Effects: Other Tests
Post-“activism” operating performance.
Performance of HF pursuing “activist” agendas.
All models estimated on basis of predicted “activism level” and Heckman methods
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Overall Objective of Paper
Define HF Activism Think hard about def’n of activism
Identify HF Selections Think hard about distinctions between objectives Think hard about selection-obervability-act, level.
Measure HF Effects Formal selection model
Estimate with care: Results fascinating!