Hubris and Activist Hedge Fund Success

The growing visibility and aggressive tactics by some activist hedge funds raises the question of what determines whether these activist campaigns are successful. Given the lack of significant governmental oversight of hedge funds and their incentive structure, we propose that hubris is likely to play a role in explaining their success. Specifically we investigate and find that hedge funds that exhibit more hubris based on prior campaigns and their aggressiveness towards the target firm are less likely to be successful in achieving their stated goals. Our paper contributes to understanding activist hedge funds by examining how hubris may impact their success or failure.