Few phrases send chills up a CEO’s spine like „activist shareholder.“ In the past year, investment funds such as Elliott Investment Management have successfully pressured companies such as Starbucks and Southwest Airlines to overhaul their boards and their operations.
Few phrases send chills up a CEO’s spine like „activist shareholder.“ In the past year, investment funds such as Elliott Investment Management have successfully pressured companies such as Starbucks and Southwest Airlines to overhaul their boards and their operations.
But there’s a different species of activist shareholder, says Jonathan Cohn, associate professor of finance at Texas McCombs. He calls them the quasi-insider. They’re a former leader, such as CEO, director, or founder, who left the target company for various reasons but still owns an ample amount of stock. They have an intimate knowledge of its inner workings.
In new research, Cohn finds that campaigns by quasi-insiders are both surprisingly common and surprisingly effective.
„Quasi-Insider Shareholder Activism: Corporate Governance at the Periphery of Control“ is published in The Review of Corporate Finance Studies.
„These things happen with some degree of regularity“, he says.
