Penney's performance after the start of the activist campaign by Pershing Square and Vomado to the performance of its control firm in the CGSW dataset, Dollar General (another discount retailer).
The results of the CGSW study, and the anecdotal evidence illustrated in Part II, challenge the view that hedge fund activism generally offers a beneficial, market-driven corrective to managerial moral hazard.
where -Z-Score is the dependent variable) in a matched sample, (146) identifying hedge funds' targets and their controls using the same matching criteria employed in the CGSW study.
Our results on the long-term increase of corporate risk-taking in firms targeted by hedge funds (relative to control firms) add to the CGSW results about the detrimental long-term financial value association of activist interventions and lend further support to the related limited commitment view of activism.
In identifying hedge funds' targets and their controls, we again use the same matching criteria employed in the CGSW study, (156) but with a (smaller) sample where information on executive compensation is available.
When examined in light of the CGSW study, however, this account of staggered boards (and, by analogy, other defensive measures) presents several difficulties.
But the CGSW study also challenges the conclusions drawn by the BBJ study about the adoption of defensive measures in a more subtle way.
When read against the results obtained by the CGSW study the additional evidence provided by this Article on the increase of bankruptcy risk in firms targeted by hedge funds, these findings seem to suggest that state anti-takeover statutes make firms less "appealing" to activist hedge funds, as they strengthen a board's ability to resist activists' demands for short-term changes.
194) Read against the CGSW study and the results of Table 2 above, this additional evidence strongly supports the limited commitment view of activism.
216) The combined empirical evidence documented by the CGSW study and this work, however, suggests differently.
231) As the combined results of the CGSW study and this work document, hedge fund activism seems associated with negative long-term effects on targeted firms when it is examined through an appropriate matching methodology.
The sample includes firms targeted by hedge funds and control firms (identified using the Abadie-Imbens matching estimator described in the CGSW study).