This study examines the causal impacts of political influence on hedge fund activism in an exogenous setting of U.S. gubernatorial election. Local incumbent politicians have incentives to protect local inefficient firms from being targeted by activists because activism could lead to divestment and local worker layoffs. And such incentives can become weaker in election years because political competition increases the incumbent politician’s accountability to broader groups of stakeholders. Consistent with this prediction, the likelihood of local firms being targeted by activists is shown to be significantly higher during election years. Moreover, the firm’s political connections mitigate the effects of election, suggesting that politicians still maintain protection to connected firms. Further cross-sectional tests show that the effects of election are stronger (1) for firms with lower labor intensity, severer problem of free cash flow and lower efficiency, and (2) when the political competition is fiercer. Additional tests reveal that hedge fund activism enhances the target firm’s operating performance and creates larger value for investors when it faces weaker political influence. To sum up, our findings suggest that political influence affects hedge fund activism and the activists strategically adjust the timing of initiating campaigns according to the changes of such influence.

这项研究考察了在美国州长选举的外源环境下，政治影响对对冲基金行动的因果关系。当地的现任政客有动机保护本地低效率的公司免受激进主义者的攻击，因为激进主义可能导致撤资和当地工人裁员。而且，由于政治竞争增加了现任政客对更广泛的利益相关者群体的责任感，因此在选举年中，这种激励措施可能会变得更弱。与此预测一致，在选举年期间，激进分子将本地公司作为目标的可能性被证明更高。此外，企业的政治联系减轻了选举的影响，这表明政治人物仍然对关联企业保持保护。进一步的横截面测试表明，选举的影响更大（1）对于劳动强度较低的公司，自由现金流和效率降低的问题更为严重；（2）当政治竞争更加激烈时。进一步的测试表明，对冲基金的积极性增强了目标公司的经营业绩，并在面对较弱的政治影响力时为投资者创造了更大的价值。综上所述，我们的发现表明，政治影响力影响对冲基金的积极性，而积极分子则根据影响力的变化来战略性地调整发起竞选的时间。进一步的测试表明，对冲基金的积极性增强了目标公司的经营业绩，并在面对较弱的政治影响力时为投资者创造了更大的价值。综上所述，我们的发现表明，政治影响力影响对冲基金的积极性，而积极分子则根据影响力的变化来战略性地调整发起竞选的时间。其他测试显示，对冲基金的积极性增强了目标公司的经营业绩，并在其政治影响力减弱时为其投资者创造了更大的价值。综上所述，我们的发现表明，政治影响力影响对冲基金的积极性，而积极分子则根据影响力的变化来战略性地调整发起竞选的时间。