Hedge Fund Activism: Determinants and Effects on the Italian Market

The aim of the present paper is the evaluation of the role of activist hedge funds in shareholder value creation within Italian listed companies; considering as dependent value the change of the price to book value ratio, we have estimated an OLS model using the data provided by Consob in the 2000-2010 period. The results of our work show clearly how the activist funds have a meaningful role in the value creation process. Such an outcome remains confirmed if we split the sample into two sub-groups related respectively to the pre-crisis period and that of the effective crisis. The contribution offered by the activist funds on the financial market does not express itself in the change in the policy of dividends, financial structure or economic indicators, as occurs in financially more advanced Countries, but through an activism aimed at orientating the companies from a strategic point of view, increasing the disclosure level and reducing the “agency costs”.