Fund Structure And The Long-Run Performance Of Activism University of Connecticut EDHEC Business School Boston College - Carroll School of Management September 1, 2015 Abstract: This paper demonstrates the importance of fund structure for understanding hedge fund activism. Firms targeted by activists with transparent fund structures outperform those targeted by activists with opaque fund structures by roughly 22% per year (risk adjusted). Outperformance is also measured in return-on-assets and valuation ratios. The effect is neither explained by superior target selection ability nor by takeover activity, but rather by increased operational efficiency and transparency of the target firms. However, the fund structure effect is not priced around the activism announcement date. Fund Structure And The Long-Run Performance Of Activism - Introduction Investor activism has been the center of debate among finance researchers and legal academics. Earlier studies (e.g., Black (1998), and Gillan and Starks (2007)) show that activist institutional investors, usually mutual funds and pension funds, do not significantly influence management on their activist agenda However, the pioneering work of Brav... More