Laura Starks, Charles E. and Sarah M. Seay Regents Chair in Finance at the University of Texas-Austin, gave Haslam College of Business faculty and doctoral students advance insight into a yet-unpublished paper, “Institutional Investors and Hedge Fund Activism,” on Friday, April 7.
The workshop came on the heels of Starks' college-wide presentation, “Incentives and Monitoring of Managers: The Effects of Cultural and Governance Influences,” held on Thursday, April 6.
“This is the first time I've presented this paper,” Starks told workshop participants on Friday. “There has been an active debate by U.S. and European regulators about the role of hedge fund activism. We studied hedge fund contact with other shareholders.”
Starks went on to explain that activist hedge funds are often seen from two different positions: One holds they are in it for the short term and seek quick profits, while the other holds that they make companies better from the standpoint of structure and profitability.
“We do see shareholders who may be disappointed with a firms’ performance approach activist hedge funds because they want to bring about change,” Starks said.
Tracie Woidtke, head of the finance department and David E. Sharp/Home Federal Bank of Tennessee Professor in Banking and Finance, said Starks’s visit to Haslam brings a deeper understanding and valuable insights into complex issues, such as executive compensation and hedge fund investing, that are frequently scrutinized in the popular press and examined by policy makers.
“Laura Starks is a recognized expert on the significant influence institutional investors can have over companies through both their equity trading and shareholder activism,” Woidtke, a research fellow of the Neel Corporate Governance Center, said. “In my view, the most important aspect of Professor Starks’ visit is the time she spent meeting individually with faculty and doctoral students. She spent a great deal of her visit listening to others and providing guidance on current research being conducted by our faculty and doctoral students and on college and departmental strategies for supporting these activities.”
An award-winning researcher, Starks has served in an editorial capacity at the Review of Financial Studies and the Journal of Finance and has been recognized with numerous awards for outstanding contribution to research in corporate governance.
She has served as an independent director for TIAA-CREF mutual funds and CREF retirement accounts and currently serves on the: Investment Advisory Committee for the Employees Retirement System of Texas, Board of Governors of the Investment Company Institute and Governing Council of the Independent Directors Council.
Starks also serves on numerous councils, panels and boards for: the Norwegian government, FTSE-Russell, Texas Wall Street Women and AFFECT. She has consulted for corporations, financial institutions and government agencies and was recently a Distinguished Visiting Scholar at the Securities and Exchange Commission.