This study examines the spillover effect of shareholder activism against target firms on financial reporting by non-target firms in portfolios held by the same activist shareholders. We find that firms that are not the target of institutional shareholders’ activism campaigns report more positive abnormal accruals. Cross-sectional tests indicate that the effect is more pronounced i) for firms that have more opportunities to engage in upward earnings management, or for firms with less effective alternative monitoring forces, and ii) when investors are more sensitive to good news. We also find that the effect is stronger when activist shareholders are more experienced, are waging more confrontational campaigns against target firms, and have larger holdings in non-target firms. We further find that non-target firms tend to report lower magnitude of asset write-downs, are more likely to restate financial statements and meet or beat earnings benchmarks, and exhibit a more optimistic tone in their 10-K/10-Q filings. Overall, our findings suggest that firms tend to window-dress their mandatory reporting to preempt possible shareholder activism against them.

本研究考察了股东激进主义对目标公司的溢出效应对同一激进股东持有的投资组合中非目标公司的财务报告的溢出效应。我们发现，不是机构股东激进主义运动目标的公司报告了更多的正异常应计。横截面测试表明，i) 对于有更多机会进行向上盈余管理的公司，或者对于替代监督力量不太有效的公司，这种影响更为明显，并且 ii) 当投资者对好消息更加敏感时。我们还发现，当激进股东更有经验、对目标公司发起更多对抗性运动以及在非目标公司持有更多股份时，这种影响会更强。我们进一步发现，非目标公司往往报告的资产减记幅度较小，更有可能重述财务报表并达到或超过盈利基准，并在其 10-K/10-Q 申报中表现出更乐观的基调。总体而言，我们的研究结果表明，公司倾向于装饰他们的强制性报告，以抢占可能针对他们的股东激进主义。