How are hedge fund activists changing the landscape of corporate governance?

The landscape of corporate governance has changed to a new era of shareholder activism, and one successful driving force behind it is the activist hedge fund, which is rarely regarded as a traditional gatekeeper for shareholders. Many modern corporations are established on the separation of ownership and control. When the shareholders actively interfere with the running of the business, we call the phenomenon “shareholder activism”. In recent years, many such shareholders are renowned hedge funds, and their huge success has earned the phenomenon a name – “hedge fund activism”. In this paper, I present the evolution of shareholder activism, the norm shifting in business ethics of the purpose of a firm, the conflicting goals of long term and short term investors, the potential coordination channels among these investors, as well as how the concept of corporate governance has evolved to accommodate the emphasis on business ethics.