Whose fault is it? CEO Ideological Self-Attribution and Firm Resistance to Hedge Fund Activism

Longwang Fu; Jane Lu

doi:10.5465/AMPROC.2023.143bp

Whose fault is it? CEO Ideological Self-Attribution and Firm Resistance to Hedge Fund Activism

Department of Management

Research output: Chapters, Conference Papers, Creative and Literary Works › RGC 32 - Refereed conference paper (with host publication) › peer-review

1 Citation (Scopus)

Abstract

Much research on hedge fund activism (HFA) has focused on its antecedents and outcomes, but little is known about what occurs during the campaign process, especially how target firms respond to activists. Building on ideo-attribution effect, we develop an explanation concerning the role of CEO political ideology in determining target resistance. We argue that the more liberal (versus conservative) the target CEOs are, the more likely they will attribute the causes of HFA to contextual factors over which they may perceive little control and personal responsibility, which then leads to the target firms’ higher level of resistance to activists. This impact of CEOs’ political ideology is contingent on their perceived activism uncertainty and managerial discretion. In a sample of U.S. public firms from 2009 to 2020, we find support for our contentions. Our findings contribute to research on the HFA process, ideo-attribution effect, and corporate response to investor activism.

© 2023 Academy of Management

Original language	English
Title of host publication	Academy of Management Proceedings
Editors	Sonia Taneja
Publisher	Academy of Management
Volume	2023
DOIs	https://doi.org/10.5465/AMPROC.2023.143bp
Publication status	Published - 1 Aug 2023
Event	83rd Annual Meeting of the Academy of Management (AOM 2023) - Boston, United States Duration: 4 Aug 2023 → 8 Aug 2023 https://aom.org/event-page/2023/08/04/higher-logic-calendar/the-83rd-annual-meeting-of-the-academy-of-management https://journals.aom.org/toc/amproc/2023/1

Conference

Conference	83rd Annual Meeting of the Academy of Management (AOM 2023)
Place	United States
City	Boston
Period	4/08/23 → 8/08/23
Internet address	https://aom.org/event-page/2023/08/04/higher-logic-calendar/the-83rd-annual-meeting-of-the-academy-of-management https://journals.aom.org/toc/amproc/2023/1

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title = "Whose fault is it? CEO Ideological Self-Attribution and Firm Resistance to Hedge Fund Activism",

abstract = "Much research on hedge fund activism (HFA) has focused on its antecedents and outcomes, but little is known about what occurs during the campaign process, especially how target firms respond to activists. Building on ideo-attribution effect, we develop an explanation concerning the role of CEO political ideology in determining target resistance. We argue that the more liberal (versus conservative) the target CEOs are, the more likely they will attribute the causes of HFA to contextual factors over which they may perceive little control and personal responsibility, which then leads to the target firms{\textquoteright} higher level of resistance to activists. This impact of CEOs{\textquoteright} political ideology is contingent on their perceived activism uncertainty and managerial discretion. In a sample of U.S. public firms from 2009 to 2020, we find support for our contentions. Our findings contribute to research on the HFA process, ideo-attribution effect, and corporate response to investor activism. {\textcopyright} 2023 Academy of Management",

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N2 - Much research on hedge fund activism (HFA) has focused on its antecedents and outcomes, but little is known about what occurs during the campaign process, especially how target firms respond to activists. Building on ideo-attribution effect, we develop an explanation concerning the role of CEO political ideology in determining target resistance. We argue that the more liberal (versus conservative) the target CEOs are, the more likely they will attribute the causes of HFA to contextual factors over which they may perceive little control and personal responsibility, which then leads to the target firms’ higher level of resistance to activists. This impact of CEOs’ political ideology is contingent on their perceived activism uncertainty and managerial discretion. In a sample of U.S. public firms from 2009 to 2020, we find support for our contentions. Our findings contribute to research on the HFA process, ideo-attribution effect, and corporate response to investor activism. © 2023 Academy of Management

AB - Much research on hedge fund activism (HFA) has focused on its antecedents and outcomes, but little is known about what occurs during the campaign process, especially how target firms respond to activists. Building on ideo-attribution effect, we develop an explanation concerning the role of CEO political ideology in determining target resistance. We argue that the more liberal (versus conservative) the target CEOs are, the more likely they will attribute the causes of HFA to contextual factors over which they may perceive little control and personal responsibility, which then leads to the target firms’ higher level of resistance to activists. This impact of CEOs’ political ideology is contingent on their perceived activism uncertainty and managerial discretion. In a sample of U.S. public firms from 2009 to 2020, we find support for our contentions. Our findings contribute to research on the HFA process, ideo-attribution effect, and corporate response to investor activism. © 2023 Academy of Management

U2 - 10.5465/AMPROC.2023.143bp

DO - 10.5465/AMPROC.2023.143bp

M3 - RGC 32 - Refereed conference paper (with host publication)

VL - 2023

BT - Academy of Management Proceedings

A2 - Taneja, Sonia

PB - Academy of Management

T2 - 83rd Annual Meeting of the Academy of Management (AOM 2023)

Y2 - 4 August 2023 through 8 August 2023

ER -

Whose fault is it? CEO Ideological Self-Attribution and Firm Resistance to Hedge Fund Activism

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