Archive for May, 2015

The international evolution of activism

News on activists and their campaigns have multiplied in the last years, and concerns among possible targets has also risen, which may have fostered consultations and analysis on how to prevent an attack and how to react to it when it comes.

In a recent paper, Angela Giovinco, a Sodali executive, tried to understand all these trends. (1)


She refers to some stylized facts:

  • Target companies have become bigger,
  • Activists don`t only focus in unlocking value by replacing managers and directors, or alter the financial strategies in the company. Their strategies have become much more complex.
  • Target companies are not necessarily underperforming companies; they don`t need to be in crisis or restructuring situations, (see Dupont`s case in 2015).
  • Money has recently poured into activist tools, such as hedge funds.
  • Activism started in the USA, in the 1980`s, but since then it has spread to Canada, UK and other European countries.

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Powerful Independent Directors

The European Corporate Governance Institute published in January 2014 a working paper written by Fogel, Kathy and Ma, Liping and Morck, Randall, in which they advocated for “Powerfull independent directors” (PID) to be present in boards. (1)

PIDs are defined as individuals placed in the top quartiles in distributions for at least three out of the following factors:

  • Degree centrality, or number of people with whom the person is connected;
  • Closeness centrality: mean degrees of separation with others in the network;
  • Betweeness centrality: number of pairs of people he serves as connector;
  • Eigenvector centrality: weighted average of his/her connections`s social power.

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