Is the role of shareholder activism in corporate governance overestimated?

Shareholder activism has become a prominent feature of corporate governance recently. Therefore, I collected 3,159 estimates from 78 empirical studies investigating the shareholder activism-return relationship to scrutinize the effect of shareholder activism on the firm’s returns. I find the effect of shareholder activism is often exaggerated; the literature attributes excessive importance to activism both in the short- and the long-run. For example, the abnormal returns caused by hedge fund activism and direct negotiations are often overestimated. This is, however, not the case with proxy fights, which I found to be the most abnormal-returns-creating activism approach.