​We examine the effectiveness of shareholder activism when target firms have controlling family shareholders. We find that although activists are less likely to target family firms and campaigns targeting family firms have a lower success rate, stock market reactions to activists’ Schedule 13D filings are more positive for family targets than for nonfamily targets. Activists targeting family firms are more likely to require board representation and engage in proxy fights, and they hold target shares for longer periods. Furthermore, campaigns targeting family firms create greater positive value externalities on industry peer firms, especially family peer firms.

Keywords: Shareholder activism, Family firm, Announcement return, Campaign tactic, Board, Proxy fight, Spillover effect

JEL Classification: G14, G30, G32, G34