New Barbarians at Europe's Gates? The Rise of Hedge Fund Activism in the European Union, and Ways Forward

Elisa Hendel*

The Volume 8 Staff & Daniel Edmundson ('70, Editor-in-Chief) Student Writing Prize in Comparative and International Law, Outstanding Note Award

Hedge fund activism is a highly controversial topic in corporate governance. It has split most academics and practitioners down the middle. On the one hand, anti- activists believe that activist hedge funds (i) campaign in value-destroying ways by prioritizing their short- term gains over their target’s long-term prospects and (ii) upend management’s well-informed corporate strategy in favor of an ill-informed one, leaving a corporate target in a worse state post-engagement. On the other side of the aisle, pro-activists believe that these investors (i) play a vital supervisory role in the architecture of corporate governance as a nimble check on corporate management and (ii) provide a microphone for shareholders’ demands, improving a target’s value. Faced with the expansion of cross-border activist engagements, the European Union (EU) and its Member States have strengthened their regulatory protections against “Barbarian” hedge fund activists. However, recent trends in activist activity—namely, greater focus on lasting operational and strategic corporate changes through board representation and enviro-financial campaigns—and recent empirical evidence suggests that activists are not, or are no longer, the Barbarian figure EU regulators have legislated to keep out. Thus, the EU’s anti-activist regulatory scheme may be ill-fitted to the current activist scene. This Note explores these recent developments, calls for increased moderation of the Union’s anti-activist regulations, and proposes a more nuanced approach to corporate regulation. The goal should be to encourage activist campaigns aligned with pro-activist results, and to discourage those compelling anti-activist fears from prohibiting hedge fund activism altogether.

* Articles Editor, Columbia Journal of Transnational Law; J.D., Columbia Law School, 2025; LL.B. King’s College London, 2025. The author thanks Professor Katharina Pistor for her thoughtful supervision, and to the CJTL editorial team for their excellent revisions. Above all, and forever, she would like to thank her parents and her partner, the most thoughtful, supportive, and loving unit she knows. All errors are the author’s own.