Hostile activism: hostile tactics or hostile hedge funds?

Hugo Benedetti, Ehsan Nikbakht, Andrew C. Spieler*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review


In this article, we examine reputation building by activist hedge funds and provide two new findings regarding hostile activism. First, we find evidence of a permanent reputation effect to hostile activism. Activist hedge funds that have engaged in hostile tactics receive on average a 3% higher cumulative abnormal return (CAR) [−10, +10] on their subsequent nonhostile campaigns compared to hedge funds that have not engaged in hostile tactics. This abnormal return is positively related to the level of the hostile reputation of the activist hedge fund. Second, we find that activist hedge funds with higher hostile reputations modify their nonhostile activism style to engage hostile-like targets and pursue hostile-like objectives but withhold the use of explicitly hostile tactics. These findings imply that (1) hedge funds can build a hostile reputation using their past engagement tactics and (2) market participants perceive and value such reputation as evidenced by the higher announcement return observed in subsequent targets.

Original languageEnglish
Pages (from-to)1-33
Number of pages33
JournalJournal of Financial Research
StatePublished - 19 Jan 2024

Bibliographical note

Publisher Copyright:
© 2024 The Southern Finance Association and the Southwestern Finance Association.


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