Should All Companies Beware Of Activist Investors?

Should All Companies Beware Of Activist Investors? by IMD Professor Nuno Fernandes

Like it or not activist investors are here to stay and are radically changing the business landscape

Activist investors are relatively new – but very influential – players in international capital markets.

Activist investors are shareholders at publicly traded companies who attempt to affect change in an organization either by directly appealing to, or putting heavy pressure on, the company’s board of directors, bypassing the normal advisory process.

The scope of activist investors’ actions varies depending on their assertiveness and on what exactly they seek to change at a given company.

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The firms that activists target tend to underperform relative to their industry. Due to activists’ aggressive attitude toward management and hostile...