The Impact of Activist Hedge Funds on Corporate Strategy: Influence on Governance Reforms and Long-Term Financial Performance

  • Unique Paper ID: 168225
  • Volume: 11
  • Issue: 5
  • PageNo: 217-227
  • Abstract:
  • Activist hedge funds have become increasingly prominent in shaping corporate governance and strategy in public companies, particularly in the United States and other developed markets. This paper examines the role of activist hedge funds in influencing corporate strategy, pushing for governance reforms, and impacting the long-term financial performance of targeted companies. By leveraging their financial power and actively engaging with management, these hedge funds can drive changes ranging from asset divestitures to board restructurings. While some argue that activist hedge funds improve efficiency and create shareholder value, critics suggest that they may prioritize short-term gains over sustainable long-term growth. Through a review of case studies and empirical research, this paper explores both the positive and negative effects of activist hedge funds on corporate strategy and financial outcomes.

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