Shareholder Activism and the Timing of Blockholder Disclosure

In this paper, we propose a model including the trading stage (acquisition of shares and blockholder disclosure) and the governance stage of activism. We analyze the blockholder's timing of disclosure, allowing for a strategic behavior. In some cases, the blockholder voluntarily renounces to use the full reporting window and makes an immediate announcement. The key to the analysis is the idea that what happens during the trading stage influences the governance stage via the belief of the firm's incumbent about the wish or capacity of the blockholder to launch a confrontational activist campaign if he does not cooperate. This model also offers the possibility to discuss the consequences of a shortening of the legal disclosure period. It predicts that shortening the legal reporting window would only affect the expected benefit of the blockholder when the cost of activism is low or the created value is high. Such a reform would favor minority shareholders