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Comments on: Hedge Fund Activism, Corporate Governance, and Firm Performance

Comments on: Hedge Fund Activism, Corporate Governance, and Firm Performance. Dr. Joseph R. Mason Drexel University, The Wharton School, and Federal Deposit Insurance Corporation. Overall Objective of Paper. Define HF Activism Identify HF Selections Measure HF Effects.

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Comments on: Hedge Fund Activism, Corporate Governance, and Firm Performance

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  1. Comments on:Hedge Fund Activism, Corporate Governance, and Firm Performance Dr. Joseph R. Mason Drexel University, The Wharton School, and Federal Deposit Insurance Corporation

  2. Overall Objective of Paper • Define HF Activism • Identify HF Selections • Measure HF Effects

  3. Define HF Activism: Wide Variety of HF Strategies • Fundamental Underlying • Information • Capital

  4. Define HF Activism: Wide Variety of HF Strategies • Fundamental Underlying • Information • Capital

  5. Define HF Activism: Wide Variety of HF Strategies • Fundamental Underlying • Information • Capital

  6. Define HF Activism: Wide Variety of HF Strategies • Fundamental Underlying • Information • Capital Regulatory Arbitrage

  7. Regulatory Arbitrage: Hedge Fund Voting Is this activism by BJPT definition?

  8. 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.

  9. 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

  10. Overall Objective of Paper Estimate with care: Results fascinating! • 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

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