Study Says Activist Investors Good For Long Term

Critics have charged that the practice of activist hedge fund investors generates short term gains for activists but weakens the companies in the long run. This isn’t true, according to a new academic study titled "The Long Term Effects of Hedge Fund Activism."

Harvard University’s Lucian Bebchuk, Duke University's Alon Brav and Columbia University's Wei Jiang examined activist targets from 1994 to 2007, monitoring the stock price of activist target stocks against a benchmark index three years before and five years after the target intervention month.

In almost all cases, the...