Windows of Opportunity: How Shareholder Activists Capitalize on Periods of Disruptive Organizational Change

Abstract

Inspired by research on the temporal nature of opportunities, we extend the idea that financially motivated shareholder activists target firms based on opportunities. We argue that certain organizational conditions create “windows of opportunity” for these activists to intervene in companies, which, when exploited, increase their odds of success. Drawing on event-based theories of organizational change and disruption, we hypothesize that firms become more likely targets of financial activists after experiencing organizational events that cause internal disruption to their business. We test this in the context of CEO successions and litigation and find that shareholder activists are more likely to target firms that recently had a transition in CEO or were sued. We further show that activists are more successful in achieving their objectives when they target firms based on these opportunities. Viewing opportunities through a temporal lens, this study extends research on the drivers of shareholder activism.

Speaker Biography

Mark DesJardine is the Harvey H. Bundy III T’68 Faculty Fellow at Dartmouth College’s Tuck School of Business and a senior fellow at Wharton’s ESG Analytics Lab. He is an expert in corporate governance who has published extensively on shareholder activism. His research utilizes large datasets and econometric tools to develop applied models that inform various aspects of shareholder engagements, including corporate vulnerability to shareholder activism and proxy vote outcomes. He is an associate editor at Management Science and a senior editor at Organization Science. He is also the Treasurer and a director on the board of the Alliance for Research on Corporate Sustainability and a CFA Charterholder.