Hedge fund activism, R&D efficiency and firm value

被引：0
|
作者：
Watson, Justin [1 ]
How, Janice [1 ]
Verhoeven, Peter [1 ]
机构：
[1] Queensland Univ Technol, Sch Econ & Finance, Gardens Point Campus, Brisbane, Qld 4001, Australia
来源：
RESEARCH IN INTERNATIONAL BUSINESS AND FINANCE | 2024年 / 71卷
关键词：
Hedge fund activism; Innovation; R&D efficiency; GOVERNANCE;
D O I：
10.1016/j.ribaf.2024.102494
中图分类号：
F8 [财政、金融];
学科分类号：
0202 ;
摘要：
We investigate the effectiveness of hedge fund activism in addressing inefficient R&D investment and creating long-term value at target firms. Using an endogenous growth model to estimate efficient R&D investment levels, we find target firms exhibit a tendency to overinvest in R&D. The likelihood of being targeted and activism announcement returns increase with R&D overinvestment. Despite observable cuts in R&D expenditure following activism, our analysis shows no significant improvement in R&D efficiency over the subsequent three years. Additional tests, controlling for the activist's objectives, reputation, and stock selection ability, reveal a negative impact of activism on value creation. Our study offers important insights into how hedge fund activism shapes corporate R&D strategies and highlights challenges in achieving sustainable innovation and value enhancement through activist interventions.
引用
收藏
页数：20
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