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OSIM Research Seminar Series - Dr. Margarethe Wiersema

Friday, December 2, 2022 at 10:30am to 12:00pm

JSOM, 2.902

ACTIVISTS HAVE CEOS ON THE ROPES – WHEN DOES THE BOARD THROW IN THE TOWEL?

ABSTRACT :  With more than 180 campaigns against publicly traded companies in 2020, activist investors are rattling CEOs and boardrooms of companies globally. An activist investor campaign is an unsolicited and unwelcome attempt by one of the firm’s major shareholders to influence the governance, financial, and/or strategic direction of the firm in order to enhance shareholder value. According to J.P. Morgan (2015) “No recent development has influenced firms’ strategic and financial decision-making as profoundly.” Activist investor campaigns to enhance shareholder value render a critical assessment of firms’ strategy and performance. While activists have CEOs on the ropes, the question arises as to whether the board will fire the CEO? We propose that the social context surrounding an activist campaign will influence the board’s perception and their assessment of the CEO. We find that CEO dismissal is more frequent in activist targeted firms with low financial performance and in campaigns in which the activist investor issues a letter. We also find that high levels of institutional investor ownership and activist board representation increases the probability of CEO dismissal. By examining the factors that influence the board’s decision to dismiss the CEO, our study contributes to understanding the influence of financial activists on board decision-making

Persons with disabilities may submit a request for accommodations to participate in this event at UT Dallas' ADA website. You may also call (972) 883-5331 for assistance or send an email to ADACoordinator@utdallas.edu. All requests should be received no later than 10 business days prior to the event.

Event Type

Lectures & Workshops

Department
Naveen Jindal School of Management
Contact Information
Jason Kautz
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