How corporate financial policies response to activist managers: evidence from Iraq

This paper investigates whether the presence of activist managers in publicly traded firms affects financial policies. Our results show that activist managers increase managers’ strategic planning and corporate efficiency, confirming the notion that managerial-owned firms are more efficient than other counterparts. We find that the presence of activist managers increases their capital expenditure and has a positive effect on firm dividend payments. This efficiency leads ultimately to an increase in firm performance. Our results have important implications for investors and policy makers in Iraq and other under-developed markets where managers’ investors usually have substantial equity stakes in public firms. Keywords: Managerial Activism, Financial Policy, Financial Decisions, Iraq.