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Predatory Value ExtractionHow the Looting of the Business Corporation Became the US Norm and How Sustainable Prosperity Can Be Restored$
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William Lazonick and Jang-Sup Shin

Print publication date: 2019

Print ISBN-13: 9780198846772

Published to Oxford Scholarship Online: January 2020

DOI: 10.1093/oso/9780198846772.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2020. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 14 August 2020

The Value-Extracting Outsiders

The Value-Extracting Outsiders

(p.127) 6 The Value-Extracting Outsiders
Predatory Value Extraction

William Lazonick

Jang-Sup Shin

Oxford University Press

This chapter exposes a particularly aggressive species of activist shareholder, hedge-fund activists, who are ready to take advantage of changes in proxy-voting and engagement rules to enhance their value-extracting power and to build private “war chests” that serve to enhance their value-extracting power even more. It examines the evolution and the current state of hedge-fund activism. After explaining this phenomenon’s origin and expansion, it investigates in particular Carl Icahn’s transition from the most representative corporate raider to one of the most “successful” hedge-fund activists in order to delineate vividly the characteristics and methods of the new value-extracting outsiders. It also examines how “co-investments” between hedge-fund activists and institutional investors are carried out.

Keywords:   Hedge-fund activists, Carl Icahn, corporate raiders, value extraction, proxy vote, engagement, Apple, National Securities Markets Improvement Act (NSMIA)

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