August 18, 2014

Hedge Fund Activism and their Long-Term Consequences

Unanswered Questions to Bebchuk, Brav and Jiang

Yvan Allaire and François Dauphin | IGOPP

In our paper “Activist” hedge funds: creators of lasting wealth? What do the empirical studies really say?” (available here), we asked Lucian Bebchuk, Alon Brav and Wei Jiang questions of the sort that any referee/reviewer for a professional journal would raise about their paper The Long-Term Effects of Hedge Fund Activism. Their paper’s aim is to examine the empirical basis for “the long-standing claim that activist interventions are followed by declines in long-term operating performance”

The reply we got from Professor Bebchuk was essentially that he had already answered all our questions in his reply to Wachtell Lipton “Don’t run away from the evidence” and that our paper was not academically rigorous because “it expresses an opposition to relying on empirical evidence”. He is wrong on both counts.

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