Wolf Pack Activism

Blockholder monitoring is central to corporate governance, but blockholders large enough exercise significant unilateral influence are rare. Mechanisms that enable moderately sized exert collective therefore important. Existing theory suggests engagement by unlikely, especially when the blocks held delegated asset managers who have limited skin in game. We present a model which multiple engage target management parallel, is, “wolf pack activism.” Delegation reduces game, decreases incentives for engagement. However, it also induces competition over investor capital (i.e., flow). show this increases and helps ameliorate problem of insufficient engagement, although can foster excess Under flow, total amount seeking skilled activist relevant incentives, predict where wolf packs arise. Flow particularly valuable incentivizing with smaller members. This paper was accepted Gustavo Manso, finance.