Returns to Shareholder Activism: Evidence from the Hermes Focus Fund

(11 Dec '06)

The study by Becht, Franks, Mayer and Rossi (2006) presents a unique analysis of private
engagements by an activist fund, based on data from Hermes (the fund manager owned by the British Telecom Pension Scheme), which covers engagements with management in
firms targeted by its U.K. Focus Fund. The authors find that the fund
substantially outperforms benchmarks and estimate that the
abnormal returns are largely associated with the engagements. For a downloadable document, please visit SSRN.