Following publication of two out of three planed posts on recent research (part 1 and part 2), the following was received from Bernard S. Sharfman concerning his availability as a speaker, complete with a PowerPoint Presentation of his most recent paper. Since I believe his article and ideas deserve wide circulation, I reproduce his note below. I would love to hear from other authors as well and would welcome guest posts from all.
In my most recent article, Activist Hedge Funds in a World of Board Independence: Creators or Destroyers of Long-Term Value? (forthcoming, Columbia Business Law Review 2016), I put forth the following argument:
An activist hedge fund can create long-term value at a public company if the Board [board of directors] has enough independence to act as an impartial arbitrator deciding between the advices provided by executive management and the activist hedge fund.
Given an adequate level of independence, the Board of a public company has the potential to recognize, if only on a temporary basis, the activist hedge fund as a competing locus of authority with executive management. It is then up to the Board, in its rightful role of arbitrator, to determine which of these two loci of authority, the executive management or activist hedge fund, has the best advice for moving the company forward. In sum, going through this process of arbitration should lead to the creation of long-term value at public companies.
I have recently put together a PPT presentation of my article that I think would be of great interest to institutional investors, corporate governance professionals and board members. It is heavy on corporate governance and light on corporate law so it should appeal to a wide audience. The first part of the presentation explains why some noted corporate law leaders refuse to accept the empirical studies that support hedge fund activism. The second part provides a new argument in support of hedge fund activism that is meant to change the minds of those who reject the empirical studies. The third part provides guidance to shareholders on how to vote in a proxy contest initiated by an activist hedge fund. The fourth part concludes with a discussion of why the recommendations of activist hedge funds always focus on disinvestment.
If you know of any opportunities where I can present my article, please contact me at [email protected].