David Beatty, a senior advisor to McKinsey, asks: Are hedge-fund activists a catalyst for beneficial changes in governance and strategy or short-term opportunists detrimental to long-term value creation?

In any case, he argues they have growing influence on global capital markets and will fundamentally transform how public-company boards interact with investors: “This includes the role of the board in investor relations, the importance of outside voices, and more transparent relationships between directors and company managers.”

“Relationships between a company’s directors and its CEO and C-suite executives depend upon many things, especially the trust between the chair (or lead director) and the CEO... Today, the presence of activists in the market have further transformed these relationships. Questions about performance and strategy have never been absent from board meetings, but with the level of activist interest, they are now always front and center.”

Read more in the full article here.

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CTMfile take: The last paragraph of the article is the most interesting for financial professionals. It advocates appointing the CFO to the board, since CFOs can be “dispassionate third-party evaluators of investment flows and alternate investment strategies”.