Shareholder Activism and Its Impact on Profitability, Return, and Valuation of the Firms in India

The paper’s prime objective is to understand the impact of Shareholder activism on firm performance. This study conducted in a unique setup where traditional activist investors such as pension funds and hedge are not present. However, cases increasing yearly an emerging economy like India. We have created comprehensive shareholder index (sha index) using multiple activisms corporate governance factors. To measure performance, we used valuation (Tobin’s Q Market capitalization), profitability (operating profit margin net margin), return ratios (Return capital equity). Panel data analysis (PDA) employed for current it overcomes shortcomings time series cross-sectional studies. sample comprises 37 listed firms’ FY2017 FY2020. Chosen firms experienced instances at least once during 2017–2020 period. As per our analysis, has significant negative measured market capitalization estimated by operating margin. Activism primarily impacts other four parameters negatively, but insignificant. India nascent stage activism, partly explaining insignificance effects Also, targeting companies. These attacks fructifying desired outcomes promoters own over 50% stake latest FY2021 been considered covid-19 impacted businesses financial year. cannot capture that reported regulatory filings. Unlike past research this area, proxy PDA instead event studies assess first empirical neither large nor