Shareholder activism impact on efficiency in Brazil

Purpose: This paper aims to investigate the long-term impact of shareholder activism on Brazilian listed companies. Design/methodology/approach: This study uses a sample of 194 companies in 2010, 2012 and 2014 and a two-stage data envelopment analysis to generate an efficiency score based on corporate governance, ownership structure and financial characteristics of companies. In the second stage, the study applies a bootstrap truncated regression to identify whether there is a relationship between the efficiency scores and a company-level activism index. Findings: The results show a negative correlation between the efficiency scores and the activism index, suggesting that activist shareholders tend to target less efficient companies. A time analysis over the period 2010-2014 does not offer evidence of impacts of activism on changes of the efficiency scores. Practical implications: Activist shareholders target less efficient companies. Shareholder activism increased after regulation that facilitated shareholder voting and required greater company transparency was introduced. Originality/value: The two-stage nature of the procedure used in the analysis ascertains that this result is not spurious, assuring data separability between productive resources and contextual variables. This study contributes to the scarce literature on activism in emerging markets.