Prix mémoire - 3e prix l Fatima Zahra Ayad

🥉Fatima Zahra Ayad - Programme Grande Ecole - Master in Management (MiM), Finance - ESCP Business School

"Empirical Study of Hedge Fund Activism in the TMT Sector over the Last 5 years"

Abstract
Hedge fund activism has emerged as a transformative force in modern corporate governance, reshaping how companies are managed, financed, and valued. Once perceived as a niche tactic, activism has become a mainstream strategy for hedge funds seeking to unlock shareholder value and impose discipline on corporate boards. This thesis investigates the dynamics and outcomes of hedge fund activism within the Technology, Media, and Telecommunications (TMT) sector—an industry characterized by rapid disruption, heavy capital requirements, and governance inefficiencies.
Using a proprietary dataset of 111 activist campaigns targeting U.S.-based TMT firms between 2019 and mid-2024, the study combines event study methodologies—cumulative abnormal returns (CAR) and buy-and-hold abnormal returns (BHAR)—with financial ratio analysis to evaluate the short- and medium-term impacts of activism. It examines changes in profitability metrics (ROA, ROE, EBITDA margin), capital structure choices, discretionary spending, and shareholder payout policies.
Findings show that activism consistently triggers short-term share price appreciation, confirming market expectations of value creation. Operational results are more nuanced: while activists frequently succeed in altering payout and leverage policies, evidence of sustained profitability improvements remains mixed. The sector’s structural challenges—intense competition, commoditization, and high capital expenditure demands—often limit the long-term impact of activist interventions.
The thesis contributes to academic literature by providing updated empirical evidence on activism in one of the most strategically significant sectors of the U.S. economy. For practitioners, it highlights both the opportunities and constraints of activism in technology-driven industries. More broadly, the research underscores the evolving role of hedge funds as catalysts of corporate change, with implications for managers, investors, and policymakers.

Introduction
Over the past two decades, hedge fund activism has evolved into one of the most visible and influential forces shaping corporate governance. What began as a contrarian strategy employed by a few investors has become a mainstream practice capable of steering multibillion-dollar corporations. Activist hedge funds leverage their financial expertise, operational insights, and strategic influence to push for governance reforms, balance sheet