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Issues Raised by Activist Shareholders: A Review of Literature

Authors: Sudam Shrikrushna Shingade, Shailesh Rastogi

Journal: TEST Engineering & Management

Publication date: 2020 May/June

Publisher: TEST Engineering & Management

URL: click here


Abstract:

Shareholders’ Activism is nascent and evolving concept in India. This papers aims to review academic literature with focus on types of issues raised by the activist investors. We also tried understanding the characteristics of target companies of these activist investors. Different types of investors have different criteria of targeting the firm and had raised various issues through proposals in past. Issues raised by investors’ falls in categories - Idle Cash related issues, Financial Performance and Valuation related issues, Executive/Senior Management related issues and Board of directors related issues. As per our review there are no clear indication about positive impact of shareholders proposals / proxies on firms though few renowned pension and hedge funds have shown good performance as an activist shareholders over the years.