Why might an activist investor be willing to strategically leak their pending campaign information? Professor Choonsik Lee and colleagues investigate this topic in their award-winning paper, Shining a Light in a Dark Corner: EDGAR Search Activity Reveals the Strategically Leaked Plans of Activist Investors, published in the Journal of Corporate Finance.

Over the course of a campaign, activists need to build a coalition of shareholders to win any voting disagreements with the incumbent management team. In this study, the authors documented a network of information flow between activists and other investors prior to 13D filings. They found an apparent leaking of activist investor campaign plans. The paper concludes that by leaking this information, and allowing the informed shareholders to build positions in the targeted stock ahead of the disclosure-related price jump, activists have added a friendly base of voting support to their campaign, increasing their likelihood of winning any fight with managers.

For their work Professor Choonsik Lee, along with Matthew E. Southern of the University of South Carolina Darla Moore School of Business and Ryan Flugum of the University of Northern Iowa, won two awards for this paper, including the Outstanding Overseas Scholar Award from the 2021 Joint Conference with the Allied Korea Finance Associations and the Best Paper Award from the 15th Annual Conference on Asia-Pacific Financial Markets (CAFM).