Annals of Corporate Governance

Wolf-Georg Ringe

Regulatory Competition in Global Financial Markets — The Case for a Special Resolution Regime

全球金融市场中的监管竞争——特别解决机制的案例

Joseph A. McCahery

Erik P. M. Vermeulen

Venture Capital 2.0: From Venturing to Partnering

风险投资2.0：从冒险到合作

I. INTRODUCTIONHedge fund activism has recently spiked, almost hyperbolically.1 No one disputes this, and most view it as a significant change. But, their reasons differ. Some see activist hedge funds as the natural champions of dispersed and diversified shareholders, who are less capable of collective action in their own interest.2 A key fact about activist hedge funds is that they are undiversified and typically hold significant stakes in the companies that comprise their portfolios.3 Given their larger stakes and focused holdings, they are less subject to the rational apathy that characterizes more diversified and even indexed investors, such as pension and mutual funds, who hold smaller stakes in many more companies. So viewed, hedge fund activism can bridge the separation of ownership and control to hold managements accountable.Others, however, believe that activist hedge funds have interests that differ materially from those of other shareholders. Presidential contender Hillary Clinton has criticized them as hit-and-run activists whose goal is to force an immediate payout,4 and this theme of an excessively short-term orientation has its own history of academic support.5 From this perspective, the rise of activist funds to power implies that creditors, employees, and other corporate constituencies will be compelled to make wealth transfers to shareholders.This Article explores this debate in which one side views hedge funds as the natural leaders of shareholders and the other side as short-term predators, intent on a quick raid to boost the stock price and then exit before the long-term costs are felt. We are not comfortable with either polar characterization and thus begin with a different question: Why now? What has caused activism to peak over the last decade at a time when the level of institutional ownership has slightly subsided? Here, we answer with a two-part explanation for increased activism. First, the costs of activism have declined, in part because of changes in SEC rules, in part because of changes in corporate governance norms (for example, the sharp decline in staggered boards), and in part because of the new power of proxy advisors (which is in turn a product both of legal rules and the fact that some institutional investors have effectively outsourced their proxy voting decisions to these advisors).6 Second, activist hedge funds have recently developed a new tactic -the wolf pack-that effectively enables them to escape old corporate defenses (most notably the poison pill) and to reap high profits at seemingly low risk. 7 Unsurprisingly, the number of such funds, and the assets under their management, has correspondingly skyrocketed. 8 If the costs go down and the profits go up, it is predictable that activism will surge, which it has. But that does not answer the broader question of whether externalities are associated with this new activism.Others have criticized hedge fund activism, but their predominant criticism has been that such activism amounts in substance to a pump and dump scheme under which hedge funds create a short-term spike in the target stock's price, then exit, leaving the other shareholders to experience diminished profitability over the long-run.9 This claim of market manipulation is not our claim (nor do we endorse it). Rather, we are concerned that hedge fund activism is associated with a pattern involving three key changes at the target firm: (1) increased leverage, (2) increased shareholder payout (through either dividends or stock buybacks), and (3) reduced long-term investment in research and development (R&D). The leading proponent of hedge fund activism, Harvard Law Professor Lucian Bebchuk, has given this pattern a name: investment-limiting interventions.10 He agrees that this pattern is prevalent but criticizes us for our failure to recognize that investment-limiting interventions by hedge funds move targets toward . . . optimal investment levels because managers have a tendency to invest excessively . …

John C. Coffee Jr.

Darius Palia

The Wolf at the Door: The Impact of Hedge Fund Activism on Corporate Governance

门口的狼：对冲基金激进主义对公司治理的影响

Geoffrey Wood

Chris Brewster

Corporate Governance and Human Resource Management

公司治理与人力资源管理

This paper provides an exhaustive literature review of the motives for public-to-private LBO transactions.First, the paper develops the theoretical framework for the potential sources of value creation from going private: a distinction is made between the reduction in agency costs, stakeholder wealth transfers, tax benefits, transaction costs savings, takeover defense strategies, and corporate undervaluation.The paper then reviews and summarizes whether and how these theories have been empirically verified in the four different strands of literature in LBO research.These strands of literature are categorized by phase in the LBO transaction: Intent (of a buyout), Impact (of the LBO on the various stakeholders), Process (of restructuring after the leveraged buyout) and Duration (of retaining the private status).Then, the paper shows that in the first half of the 2000s, a public-to-private LBO wave re-emerged in the US, UK and Continental Europe, whose value vastly exceeded that of the 1980s US LBO wave.Finally, the paper provides suggestions for further research.

Luc Renneboog

Cara Vansteenkiste

Leveraged Buyouts: Motives and Sources of Value

杠杆收购：动机与价值来源

Matthew M. C. Allen

New Directions for Corporate Governance: A Comparative Capitalisms Perspective

公司治理的新方向：比较资本主义视角

Daniel Kárpáti

Jeroen Verbouw

The Family Firm: A Synthesis, Stylized Facts, and Future Research Directions

家族企业：综合分析、典型事实与未来研究方向

Anna Grosman

Gerhard Schnyder

Alvaro Cuervo-Cazurra

Ilya Okhmatovskiy

Geoffrey T. Wood

Rethinking State Capitalism: A Cross-Disciplinary Perspective on the State’s Role in the Economy

Abbreviation	Ann. Corp. Gov.
Journal Impact	1.28
Quartiles(Global)	MANAGEMENT(Q4)

Publication Information	Publisher: Now Publishers Inc，Publishing cycle: ，Journal Type: journal，Open Access Journals: No
Basic data	Year of publication: 2019，Proportion of original research papers: ，Self Citation Rate:， Gold OA Rate:

Annals of Corporate Governance

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