Véronique Bessière

Hedge fund activism: insights from a French clinical study

Over the period from October 2006 to May 2008, Atos Origin, a French information technology company, was the target of two activist hedge funds, Centaurus and Pardus. This article investigates in detail how the activists initiated their actions, how the management organized its defence and how both were received by the market. The analysis reveals that, although Atos seemed to be an attractive opportunity, the funds failed in their primary objective, the sale of the target. In fact, the chairmen of Atos succeeded in discrediting the two hedge funds by getting support in the French context, not particularly prone to and sometimes even hostile towards shareholders interests. Our findings show that the success/failure classification used in large-sample studies, and based very often on officially stated goals, bears a considerable risk of misinterpretation. The Atos case shows that empirical studies should more heavily rely on what really matters for hedge fund activism, i.e. the sale of the target, spin-offs or cash-outs. While governance related motives are often mentioned and easily enforced, they do not make activism profitable and cannot, by themselves, be considered as primary motives for hedge fund activism. As a consequence, the success of hedge fund activism should be assessed considering primary motives only.

Does uncertainty boost overconfidence? The case of financial analysts' forecasts

Purpose - – This article aims to examine the link between uncertainty and analysts reaction to earnings announcements for a sample of European firms during the period 1997-2007. In the same way as Daniel Design/methodology/approach - – In this study, the authors test analysts overconfidence through the overreaction preceding a public announcement followed by an underreaction after the announcement. If overconfidence occurs, over- and underreactions should be, respectively, observed before and after the public announcement. If uncertainty boosts overconfidence, the authors predict that these two combined misreactions should be stronger when uncertainty is higher. Uncertainty is defined according to technology intensity, and separate two types of firms: high-tech or low-tech. The authors use a sample of European firms during the period 1997-2007. Findings - – The results support the overconfidence hypothesis. The authors jointly observe the two phenomena of under- and overreaction. Overreaction occurs when the information has not yet been made public and disappears just after public release. The results also show that both effects are more important for the high-tech subsample. For robustness, the authors sort the sample using analyst forecast dispersion as a proxy for uncertainty and obtain similar results. The authors also document that the high-tech stocks crash in 2000-2001 moderated the overconfidence of analysts, which then strongly declined during the post-crash period. Originality/value - – This study offers interesting insights in two ways. First, in the area of financial markets, it provides a test of a major over- and underreaction model and implements it to analysts reactions through their revisions (versus investors reactions through stock returns). Second, in a broader way, it deals with the link between uncertainty and biases. The results are consistent with the experimental evidence and extend it to a cross-sectional analysis that reinforces it as pointed out by Kumar.

From Lab to Venture: Cognitive Factors Influencing Researchers' Decision to Start a Venture

Research in academic entrepreneurship has gained momentum in the last decades, mainly because of its contribution to technological innovations and national economies. However, little attention has been paid to the cognitive factors influencing the decision by researchers to create a venture. The purpose of this article is to draw on the tenets of entrepreneurialcognition and behavioural decision-making theories to explain why some researchers decide to become entrepreneurs. Our research analyses the difference in cognitive style and risk behaviour between academics that moved from research to spin-off ventures and academics that remain in the laboratory. Our results provide empirical evidence that higher self-efficacy and risk-taking behaviour are positively related to researchers transition to academic spin-offs, while opportunity recognition skills were not observed to have significant effects. Taken together, these results emphasise the need for further research on cognitive and behavioural factors influencing the decision by researchers to start a venture.

Drivers of growth: the case of French academic spin-off

Academic spin-offs (ASOs) have developed considerably in France since the 2000s. However, despite a strong increase in the number of new ventures, little is known about their ability to experience and sustain growth beyond the first five years. Based on a sample of 118 French ASOs from the same generation, this article analyses the factors that determine their growth during the development phase. These factors are derived from a resource-based view (RBV) and a dynamic capabilities approach (DCA). The results of our quantitative study show that four factors determine the growth of ASOs: entrepreneurial orientation (and broader cognitive resources), the acquisition of skills in the entrepreneurial process, the amount of public and private financing, technological capabilities and support programs.

L'INTELLIGENCE CULTURELLE DANS L'IMPLANTATION D'UN ERP : E CAS D'UNE ENTREPRISE THAÏLANDAISE “CULTURAL INTELLIGENCE” FOR ERP IMPLEMENTATION: A THAI CORPORATION CASE STUDY

A large part of existing literature on ERP implementation is based on the theories of “fit” between firm properties and IT prerequisites in terms of process integration. Among these properties, cultural differences perceived by users can be considered as the main constraining mis-alignement because referring to the persons values as to the underlying ones induced by the ERP to be implemented. However, little research has been done about the way those cultural mis-fits can be managed. In this perspective, this article uses the “cultural intelligence” concept as theoretical lens and relates the results provided by a qualitative research done in a thai corporation. The interviews conducted with the ERP project managers illustrate how they used some of the Buddhist principles to force employees to accept changes involved.

Uncertainty and Financial Analysts’ Overconfidence: European Evidence Between High-Tech and Low-Tech Firms

This article examines the link between uncertainty and analysts’ reaction to earnings announcements for a sample of European firms during the period 1997-2007. In the same way as Daniel et al. (1998), we posit that overconfidence leads to an overreaction to private information followed by an undereaction when the information becomes public. Psychological findings suggest that this effect is more prominent in an uncertain environment. Our tests are based on the relationship between forecast revisions and forecast errors. When analysts excessively integrate information in their revisions (i.e. overreact), their forecast revisions are too intense, and the converse occurs when they underreact. We implement a portfolio analysis and a regression analysis for two subsamples: high-tech and low-tech, as a proxy for uncertainty. Our results support the overconfidence hypothesis. We jointly observe the two phenomena of under- and overreaction. Overreaction occurs when the information has not yet been made public and disappears just after public release. Our results also show that both effects are stronger for the high-tech subsample. For robustness, we sort the sample using analyst forecast dispersion as a proxy for uncertainty and obtain similar results. We also document that the high-tech stocks crash in 2000-2001 moderated analysts’ overconfidence.

Hedge Fund Activism: A Clinical Study of the French Company Atos Origin

Over the period from October 2006 to May 2008, Atos Origin, a French information technology company, was the target of two activist hedge funds, Centaurus and Pardus. This article investigates in detail how the activists initiated their actions, how the management organized its defence and how both were received by the market. We find that, although Atos looked like an attractive opportunity, the funds failed in their primary objective, the sale of the target. In fact, the chairmen of Atos succeeded in discrediting the two hedge funds by taking support on the French context, not particularly prone to and sometimes even hostile towards shareholders interests. Our findings suggest that this context can create a strong support to managers entrenchment when facing activists. We also show that the success/failure classification used in large-sample studies, and based on officially stated goals, bears a considerable risk for misinterpretation. As our case shows, those objectives can not only change throughout the activism process, but may also be disclosed in different (and not exclusively official) ways. Relying solely on stated goals can significantly distort the overall judgement on the success of activism.This paper was presented at the 8th Governance International Conference, Florence, Italy, 2009 and French Financial Association Annual Conference in Brest, France, 2009.