Abstract
Historically, activist shareholders have primarily tried to affect managerial decision-making from their vantage point as outsiders. Today, activist investors are going further by demanding their own seats at the boardroom table. We examine the consequences of these activist directorships, finding that they are associated with increased reports of stakeholder harm. Supplemental analyses show that, while activist directors bring immediate benefits to shareholders, they appear to impose a managerial myopia wherein executives become less inclined to make long-term investments. Moreover, the adverse effects on stakeholder harm are most profound when a director is a delegate, meaning they work directly for an activist investor, as opposed to a trustee, who is appointed by, but does not work for, an activist investor.Research Summary
Managerial Summary