The Effectiveness of Institutional Activism
Researchers examined earnings-forecast revisions and stock returns after release of the Focus List of poorly performing companies by the Council of Institutional Investors. Using Tobin's q as a measure of a company's ability to improve performance, researchers found significant and positive abnormal forecast revisions and post-release stock returns for companies with q greater than one. Findings support the proposition that institutional activism is effective for underperforming companies - but only those companies with the ability to respond to the challenge to improve performance.
Finance and Financial Management | Portfolio and Security Analysis
Financial Analysts Journal
CATON, Gary L.; GOH, Jeremy; and Donaldson, Jeffrey.
The Effectiveness of Institutional Activism. (2001). Financial Analysts Journal. 57, (4), 21-26. Research Collection Lee Kong Chian School Of Business.
Available at: http://ink.library.smu.edu.sg/lkcsb_research/2204