Cookies?
Library Header Image
LSE Research Online LSE Library Services

Wolf pack activism

Brav, Alon, Dasgupta, Amil and Mathews, Richmond D. (2021) Wolf pack activism. Management Science. ISSN 0025-1909 (In Press)

[img] Text (Brav-Dasgupta-Mathews-accepted) - Accepted Version
Download (615kB)

Abstract

Blockholder monitoring is central to corporate governance, but blockholders large enough to exercise significant unilateral influence are rare. Mechanisms that enable moderately-sized blockholders to exert collective influence are there-fore important. Existing theory suggests that engagement by moderately-sized blockholders is unlikely, especially when the blocks are held by delegated asset managers who have limited skin in the game. We present a model in which mul-tiple delegated blockholders engage target management in parallel, i.e., “wolf pack activism.” Delegation reduces skin in the game, which decreases incentives for engagement. However, it also induces competition over investor capital (i.e, competition for flow). We show that this increases engagement incentives and helps ameliorate the problem of insufficient engagement, though it can also fos-ter excess engagement. Under competition for flow the total amount of capital seeking skilled activist managers is relevant to engagement incentives, which helps to predict when and where wolf packs arise. Flow incentives are particularly valuable in incentivizing engagement by packs with smaller members

Item Type: Article
Official URL: https://pubsonline.informs.org/journal/mnsc
Additional Information: © 2021 INFORMS
Divisions: Finance
Subjects: H Social Sciences > HG Finance
JEL classification: G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers; Acquisitions; Restructuring; Corporate Governance
G - Financial Economics > G2 - Financial Institutions and Services > G23 - Pension Funds; Other Private Financial Institutions
Date Deposited: 23 Sep 2021 13:42
Last Modified: 08 Oct 2021 23:15
URI: http://eprints.lse.ac.uk/id/eprint/112118

Actions (login required)

View Item View Item

Downloads

Downloads per month over past year

View more statistics