Activist investors play an important role in capital markets. They may not be the most popular people in the world, but a successful activist attack does make businesses more efficient and gets rid of lazy and satisfied managers. But unlike a full takeover, activist investors have to choose their targets wisely. They are not taking over control of the target company but need to convince the existing management that they need to change their strategy, sell or restructure part of their company or reduce costs. But in order to convince someone, this person has to be open to arguments or to public pressure (if the arguments don’t work, go to the press). But there is one class of people who are less receptive to arguments or public pressure than most: overconfident people.
Overconfident managers as a poison pill
Overconfident managers as a poison pill
Overconfident managers as a poison pill
Activist investors play an important role in capital markets. They may not be the most popular people in the world, but a successful activist attack does make businesses more efficient and gets rid of lazy and satisfied managers. But unlike a full takeover, activist investors have to choose their targets wisely. They are not taking over control of the target company but need to convince the existing management that they need to change their strategy, sell or restructure part of their company or reduce costs. But in order to convince someone, this person has to be open to arguments or to public pressure (if the arguments don’t work, go to the press). But there is one class of people who are less receptive to arguments or public pressure than most: overconfident people.