Hedge Fund Activism: Wagner's Award Winning Research

"Our paper, to our knowledge, is the first to provide large-sample evidence on the performance of shareholder activism around the world": this phrase opens the conclusion of the paper that won the Asia Asset Management CAMRI Prize in Asset Management (AAM-CAMRI), from over 50 applications. Hannes Wagner, Associate Professor of Finance at Bocconi, and three other coauthors, Marco Becht, Julian Franks and Jeremy Grant, realized this award-winning research: The Returns to Hedge Fund Activism: An International Study.

The prize is awarded by Asia Asset Management (AAM) together with NUS Business School's Centre for Asset Management Research and Investments (CAMRI). The 2015 Prize was awarded to the winners in two locations, Singapore and Hong Kong, where the authors presented their research to an audience of academics and senior practitioners.

"Outside of the US, activism is most frequent in countries such as Italy, Luxembourg, Germany and Switzerland", says Wagner. This means that shareholder activism is spreading from its home market, the US, to become a global phenomenon, reason why it is so important to study it. Activists adapt their strategies to local conditions and regulation, generating significant outperformances almost everywhere. The business model of shareholder activism crucially depends on the hedge funds achieving real changes in firms. "Shareholder activists only outperform in those cases where they manage to achieve their objectives, such as ousting boards, driving corporate-break-ups and pushing companies to sell themselves to the highest bidder," continues Wagner. "Not surprisingly, those that don't achieve outcomes do not make any money".