Value Created, Value Leaked: Shareholder Activism and Employee-Initiated Data Leaks

Financially motivated shareholder activism is a well-established mechanism for enhancing shareholder value, improving governance, and driving operational efficiency. Yet as activism reshapes corporate priorities, relatively little is known about how retained employees interpret and respond to these changes. Grounded in organizational justice theory, we propose that activist campaigns may shift some employees’ perceptions of distributive justice—altering the perceived balance between what they contribute and what they receive—in ways that increase the likelihood of employee-initiated data leaks. These behavioral responses, which range from deliberate disclosure driven by frustration to lapses in vigilance under pressure, are concentrated among the demands employees experience as most consequential to their daily work. Importantly, however, firms can mitigate these risks: strong track records of employee-oriented corporate social responsibility and high preexisting employee satisfaction buffer the relationship between shareholder activism and data leaks. Using difference-in-differences estimation with a novel dataset of employee-initiated data leaks, we find support for these relationships. Our findings illuminate an overlooked employee dimension of shareholder activism, showing how campaigns may inadvertently elevate internal information risk—and what firms can do to guard against it.