Windows of Opportunity: How Shareholder Activists Capitalize on Periods of Disruptive Organizational Change

Inspired by research on the temporal nature of opportunities, we extend the idea that financially motivated shareholder activists target firms based on opportunities. We argue that certain organizational conditions create “windows of opportunity” for these activists to intervene in companies, which, when exploited, increase their odds of success. Drawing on event-based theories of organizational change and disruption, we hypothesize that firms become more likely targets of shareholder activists after experiencing organizational events that cause internal disruption to their business. We test this in the context of litigation and leadership transitions, and find that shareholder activists are more likely to target firms shortly after they experience either event. We further show that activists are more successful in achieving their objectives when they target firms based on these opportunities. Viewing opportunities through a temporal lens, this study extends research on the drivers of shareholder activism.