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The Evolution of Hedge Fund Activism: From Corporate Raiders to Sustainability Crusaders?



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Christie, Anna 


The prevailing rhetoric associated with hedge fund activism is almost universally negative. This thesis provides new evidence of activist hedge fund behavior that contradicts this dominant narrative. The principal idea underpinning the thesis is that the conventional picture of hedge fund activism requires updating to account for two key recent phenomena: activist board representation and environmental, social, and governance (“ESG”) activism.

The thesis makes at least four important contributions to academic and policy debates on hedge fund activism. First, through analyzing original hand-collected data on activist hedge fund campaigns, it demonstrates that a relatively new form of activism – activist board representation – tends to involve a longer-term approach to value creation through strategic and operational changes, rather than the short term financial engineering that activist hedge funds are commonly criticized for engaging in. Second, it builds upon the study of activist board representation campaigns to argue that activist hedge funds may be well positioned to play a unique role in ESG activism by nominating specialist climate directors to corporate boards. Third, it outlines how the phenomenon of activist board representation exposes the deficiencies of the independent monitoring board and provides suggestions for potential corporate governance improvements. Finally, it theorizes the incentives behind ESG hedge fund activism, thus providing early insights into this rapidly evolving practice.

The thesis is structured as follows: Part I (Chapters 1 and 2) situates hedge fund activism and the role of the board in traditional and contemporary corporate governance debates. Chapter 1 examines the intellectual foundations underpinning the monitoring board as a response to the shareholder-manager agency problem and challenges its continued dominance in light of pressing societal challenges facing corporations. Chapter 2 critiques the narrative of short-termism that is prevalent in politics, the media, and corporate practice, which can obscure learning from the campaigns of activist hedge funds. Part II (Chapters 3 and 4) examines activist hedge fund board representation campaigns. Chapter 3 introduces this new form of hedge fund activism and presents a theory and hypotheses on the potential value associated with this type of activism. Chapter 4 tests the hypotheses presented in the preceding chapter through an empirical study analyzing activist board representation campaigns at S&P 500 companies since 2010. Part III (Chapters 5 to 7) explores ESG activism. Chapter 5 develops a new account of sustainable capitalism using the building blocks of agency theory. It highlights the major shift to passive index investing and ESG investing and analyzes the monitoring shortfall on the part of global asset managers. Chapter 6 discusses ESG hedge fund activism and – building on the theory and the empirical study presented in Part II – proposes that activist hedge funds can play a unique role in a sustainable capitalism framework by nominating specialist directors with climate or energy transition expertise to corporate boards. Chapter 7 considers socially responsible activism and presents a theoretical framework of ESG hedge fund activism.





Armour, John


Corporate governance, Hedge fund activism, Law and finance, Shareholder activism, Sustainability


Doctor of Philosophy (PhD)

Awarding Institution

University of Cambridge
AHRC (1802339)
Cambridge AHRC Doctoral Training Partnership