Wolf Pack Activism (with A lon Brav and Richmond D. Mathews)
Abstra
ct:
Blockholder monitoring is key to good corporate governance, but b
lockholders large enough to exercise significant unilateral influence are r
are. As a result mechanisms that enable small blockholders to exert collect
ive influence are important. It is alleged that institutional blockholders
(implicitly) coordinate when intervening in firms, with one acting as the “
lead” activist and others as peripheral activists, or “wolf pack” members.
We present a model of wolf pack activism. Our model formalizes a source of
complementarity across the engagement strategies of activists and highlight
s the catalytic role played by the leader. We also characterize share acqui
sition by wolf pack members and the leader, providing testable implications
on ownership and price dynamics in wolf pack formation.