Under the spotlight: How media coverage impacts shareholder activism campaigns

Abstract

This study provides novel evidence on the strategic role of media coverage in influencing shareholder activism campaigns. Analyzing a comprehensive dataset of activist interventions from 2000–2014, we find activists strategically target firms with high levels of recent business press coverage, especially negative coverage. These findings support theoretical predictions that activists prefer transparent, poorly performing firms. We also find a positive association between pre intervention press coverage and the likelihood an activism campaign receives coverage. This “sticky” media coverage effect suggests activists target visible firms to increase campaign exposure. Finally, using propensity score matching and regression analysis, we show activist campaigns receiving press coverage have significantly higher announcement returns, underscoring a key benefit of media coverage for activists. Overall, our results highlight the important interplay between media coverage, shareholder activists, and capital markets. The findings should interest managers seeking to assess activism risk and activists aiming to maximize campaign impact.