Online seminar – Value creation in shareholder activism

Enrique Schroth, Professor of Finance, EDHEC Business School

We measure value creation by activist investors via structural estimation of a model of the choice between passive investment and activism. Our estimates imply that average returns following activist intent announcements consist of 74.8% expected value creation, or treatment, 13.4% stock picking, and 11.8% sample selection effects. Higher treatment values predict improvements in firm performance and lower proxy contest probabilities, whereas abnormal announcements returns do not, suggesting that our estimate identifies more effective activism campaigns. The evidence demonstrates the importance of using the joint distribution of investment strategies and announcement returns to recover the expected returns and costs of activism.

Speaker bio

Enrique Schroth is a Professor of Finance and Academic Director of the PhD programme at EDHEC Business School. He is also a Research Fellow at the Centre for European Policy Research (CEPR). Before joining EDHEC in 2019, he was a Faculty member at Cass Business School, the Amsterdam Business School and HEC Lausanne. He received his PhD in Economics from New York University in 2002.

His current research focuses on corporate liquidity management under long term and short term cash flow risks, and on activism and value creation. His past research, in topics such as the value of corporate control, the determinants of financial fragility, and financial innovation has appeared in leading academic journals, including The Journal of Finance, the Journal of Financial Economics, the Review of Financial Studies and the Review of Finance. Professor Schroth’s work has been recognised with awards in major research conferences and by top practitioners.

To join the seminar, register and join the Zoom meeting and enter the meeting ID.

Meeting ID: 868 6554 9117
Password: 437175

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