Do Activists Turn Bad Bidders into Good Acquirers?

A new paper documents the beneficial impact of activist investors in optimizing corporate transactions.

In our new working paper, Do Activists Turn Bad Bidders into Good Acquirers?, available on SSRN, we uncover a new role of activists in the market for corporate control. We present evidence that activists curb incentives to engage in empire building acquisitions, limiting the scope of one of the most destructive forces in public companies. Hence, activists not only play an important role in facilitating the acquisition of targeted firms (see related post Activism Mergers by Boyson, Gantchev, and Shivdasani), they also constrain inefficient M&A strategies.

Source: Do Activists Turn Bad Bidders into Good Acquirers?

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