Activism and Mainstream Institutional Investors

Abstract

Institutional investors play a crucial, yet paradoxical, role in activist campaigns. With their significant holdings, large "mainstream" institutional investors - pension funds, insurance companies, and their asset managers - can often determine the success or failure of these crusades. As such, they are targeted by both the instigating activists and company management. The paradox is that, despite their substantial ownership stakes, mainstream investors appear to spearhead only a small fraction of activist campaigns.

This article sheds light on how institutional investors approach activist crusades and, more broadly, explores why they are rarely viewed as agents of change.

Keywords: corporate governance, activism, institutional investors

JEL Classification: G34