Prior research on shareholder activism has expanded our knowledge on how activism affects firms, especially with respect to the types and magnitudes of activist-impelled changes. However, it remains unanswered how deeply activist intervention morphs the targeted firms and how long such changes persist. Focusing on the firm temporal orientation, I develop theory on how activism influences the targeted firm's time horizon, both when attacked by activists and when activists leave the firm. I open the dissertation by reviewing the rapidly evolving research in shareholder activism. In my first empirical study, I examine how activist intervention shortens the targeted firm's time horizon, and how the degree of shortening is contingent on the relative motivation and capability of activist investors vis-a-vis managers. In the second study, I propose that targeted firms shift their course of strategy once activist investors leave the firm, specifically by increasing their resource-consuming investments. Yet, because of the inherent temporal tradeoff such investments present, I posit that the degree of shift is likely affected by leader attributes and situational factors. Specifically, I argue that the CEOs who are high in their future temporal focus and who have a high level of prospective wealth will increase their resource-consuming investments to a greater degree. In addition to testing hypotheses, the empirical data revealed an unexpected insight into the time horizon changes in non-targeted firms. With my dissertation, I aim to contribute to streams of research on shareholder activism, firm temporal orientation, and corporate governance.
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