Long-term valuation effects of shareholder activism

The objective is to measure how the values of firms are affected when experiencing shareholder activism. According to several researchers, firms can benefit from increased monitoring. If activism prompts managers to focus more closely on shareholder goals, it could enhance firm value over time. Strong positive valuation effects are found for firms following shareholder activism. The valuation effects accumulated to 23% on average by the end of the third year following shareholder activism. The effects appear to be somewhat more pronounced following activism initiated by individual shareholders.