Short Campaigns by Hedge Funds

ecent years have seen the rise of short campaigns by hedge funds. Nearly 80% of campaigns are undertaken by activist hedge funds, particularly those that employ hostile tactics in their long campaigns. Short campaigns are associated with negative abnormal returns of -7%, with aggregate valuation effects similar in magnitude to the gains from long activism campaigns. In contrast to long campaigns, public communication plays a critical role in short campaigns. Short campaigns are also associated with real effects, including increases in CEO turnover. Our analysis highlights the importance of short campaigns for understanding the economic impact of activist hedge funds.