Why Activist Hedge Funds Deserve Representation on Corporate Boards

Activist hedge funds will soon likely have greater leverage in proxy contests, thanks to a new rule from the Securities and Exchange Commission. But will that benefit shareholders who care about long-term value? Our study suggests that it will – sometimes.

In November 2021, the SEC adopted a universal proxy rule that allows investors to choose the combination of candidates they vote for in a contested election. This differs from the existing rule, which requires them to choose between the company’s and a dissenting shareholder’s proxy cards.

The new rule lowers the barriers for nominations from traditional activists as well … Read more