Activists – The Problem for U.S. Leadership in Global Capital Markets

Joseph W. Bartlett, Council, Reitler Kailas & Rosenblatt LLC

A lively debate is cascading through the U.S. Capital Markets, triggered by the success of well-heeled investors in public markets labeled “activists.”

Bebchuk vs. Lipton

On the one hand, the applause in favor of activists is led by certain academics, the chief being Professor Lucien Bebchuk, who has reported.

“Empirical studies show that attacks on companies by activist hedge funds benefit, and do not have an adverse effect on, the targets over the five year period following the attack.

“Only anecdotal evidence and claimed real-world experience show that attacks on companies by activist hedge funds have an adverse effect on the targets and other companies that adjust management strategy to void attacks.

“Empirical studies are better than anecdotal evidence and real-world experience.

“Therefore, attacks by activist hedge funds should not be restrained but should be encouraged.”

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