Hedge Fund Activism Changes Corporate R&D Investment Time Horizon

It understates the situation to simply state the pace of shareholder activism has increased recently.  What we are witnessing is “activism on steroids,” says a new academic white paper that considers the impact of activist investors on publicly traded stocks.  The study considers the negative impacts on research and development and shortening the corporate investment time horizon.

Impact of shareholder activism on publically traded stocks

While the impact on the stock price in the short term is clear (stock prices tend to move higher), the longer term impact is mixed, say Columbia University School of Law Professors John Coffee and Darius Palia of Rutgers Faculty.  In their white paper, “The Impact of Hedge Fund Activism: Evidence and Implications,” the report...