AN EXAMPLE - BASED, DIAGNOSTIC INVESTIGATION OF VALUE CREATION AND VALUE DESTRUCTION BY CORPORATE ACTIVISTS

Abstract

This paper investigates, through an example-based scenario, the extent to which corporate activists create or destroy shareholder value; there are five high-profile campaigns analyzed related to four major players. The foundation of the analysis is a variant of DCF model which examines the cash flows to equity. In 4 out of 5 cases the financial metrics are computed in order to assess the performance of the subject company ex-ante and ex-post activists’ involvement.