Quasi-Insider Shareholder Activism: Corporate Governance at the Periphery of Control

Abstract

AbstractWe analyze shareholder activism by “quasi-insiders”: founders, former executives, and other individuals tangentially connected to a firm. These individuals seek control in their campaigns, use aggressive tactics, and target smaller, poorly performing firms. Their campaigns are associated with positive announcement returns. Former CEOs who engage in campaigns often depart from the target under negative circumstances before launching their campaigns soon afterward. Our results suggest that insiders at the periphery of control may intervene in firms too small for traditional activists to target. (JEL: G34, G32)Received July 21, 2020; editorial decision March 26, 2023 by Editor Andrew Ellul.