Academic research also shows that activist hedge funds, which control more than US$146 billion in assets, often target their attacks on companies that are sustainable because they tend to view corporate social responsibility as a sign that a company is wasting money rather than focusing on shareholder returns, writes The Asset.
The study, conducted by Pennsylvania State University’s Mark DesJardine, Erasmus University’s Emilio Marti and HEC Paris business school’s Rodolphe Durand, looked at some 500 US-based activist campaigns between 2000 and 2016 and found that companies whose corporate social responsibility ratings were above the industry average had a 5% chance of being subject to hedge fund activism. That compares with a 3% likelihood for the industry average.