An important new study by Ed deHaan, David Larcker and Charles McClure, Long-Term Economic Consequences of Hedge Fund Activist Interventions, has found that on a value weighted basis, long-term returns are “insignificantly different from zero.” And, nearly all of the positive long-term returns are concentrated in companies that are acquired in the two-year period following the activist attack. Also, the authors found that there is no evidence that activist attacks result in long-term improvements in accounting performance measures including, return on equity, return on net operating assets, profit margin, asset turnover, and spread over borrowing costs. They concluded, “In sum, across a large battery of appropriately-matched tests, we fail to find consistent evidence that activists drive changes in accounting-based operating performance.”

The following are the overall conclusions of the study:

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