Randall Thomas
John S. Beasley II Professor of Law and Business
Director, Law & Business Program
Director, Vanderbilt in Venice
A study conducted by Professor Randall Thomas and colleagues Alon Brav, Wei Jiang and Frank Partnoy over Summer 2006 yielded a surprising result: Hedge fund activism may be getting a bad rap.
The study, entitled “Hedge Fund Activism, Corporate Governance and Firm Performance,” examined 374 efforts by 110 hedge funds to exert pressure on companies to change their strategy and/or their top management. The hedge funds acquired at least a 5% stake in their target companies, and about 40% of their interventions were viewed as hostile and resisted by company management. “We found that shares in target firms typically outperform the market, and that the best performance occurs when the hedge fund pressures the target company to change its strategy or to put itself up for sale,” Professor Thomas said. “We concluded that there is no empirical evidence for the assertion that hedge fund activism destroys value or is short term in focus.”
In addition to shareholder activism, Professor Thomas’s current research interests include corporate and securities litigation, executive compensation and corporate voting, and he is working on a book on shareholder litigation with colleague Jim Cox of Duke Law School.
Professor Thomas came to Vanderbilt Law School in 2000 to develop the Law and Business Program, an interdisciplinary second- and third-year curriculum the law school offers in conjunction with the Owen Graduate School of Management. “I came to Vanderbilt to direct the Law & Business program because, in addition to offering a great legal education, I felt we needed to train our lawyers in business school basics, such as accounting and finance,” Professor Thomas says. Now in its fifth year, the program allows students interested in focusing on corporate law an opportunity to build expertise in corporate management fundamentals as well as business law. He also directs Vanderbilt’s LL.M. program and its Summer in Venice program, which offers students at all ABA-accredited law schools an opportunity to focus on international business law and other international law topics.
