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Public Pension Fund Activism And Firm Performance
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Book Synopsis Public Pension Fund Activism and Firm Performance by : Sunil Wahal
Download or read book Public Pension Fund Activism and Firm Performance written by Sunil Wahal and published by . This book was released on 1999 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper studies the efficacy of pension fund activism and the ability or willingness of these funds to vote with their feet. I examine all firms targeted by nine major funds over a seven year period (1987-1993). Targeting announcements are associated with a small but significant wealth effect for a subset of firms. However, there is no evidence of improvement in the long-term stock price performance of targeted firms. In fact, performance continues to decline even three years after targeting. Moreover, in contrast to other institutions, pension funds do not appear to significantly reduce their holdings in underperforming firms in general, or in firms that they target. Collectively, the results cast doubt on the effectiveness of public pension fund activism as a substitute for an active market for corporate control.
Book Synopsis Pension Fund Activism and Firm Performance by : Sunil Wahal
Download or read book Pension Fund Activism and Firm Performance written by Sunil Wahal and published by . This book was released on 1998 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper studies the efficacy of pension fund activism by examining all firms targeted by nine major funds from 1987 to 1993. I document a movement away from takeover-related proxy proposal targetings in the late 1980s to governance-related proxy proposal and non-proxy proposal targetings in the 1990s. For the vast majority of firms there are no significant abnormal returns at the time of targeting. The subset of firms subject to non-proxy proposal targeting, however, experience a significant positive wealth effect. There is no evidence of significant long-term improvement in either stock price or accounting measures of performance in the post-targeting period. Collectively, these results cast doubt on the effectiveness of pension fund activism as a substitute for an active market for corporate control.
Book Synopsis The Political Limits of Public Pension Fund Activism in Corporate Governance by : Roberta Romano
Download or read book The Political Limits of Public Pension Fund Activism in Corporate Governance written by Roberta Romano and published by . This book was released on 1992 with total page 55 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis The Changing Face of Corporate Ownership by : Michael J. Rubach
Download or read book The Changing Face of Corporate Ownership written by Michael J. Rubach and published by Routledge. This book was released on 2013-10-28 with total page 202 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book examines the shareholder activism of institutional investors, and the effect of this activism on portfolio performance. By focusing on 118 institutional investors headquartered in the United States, the book is unique in addressing the shareholder activism of a large sample. Institutional shareholder activism is defined to include both traditional mechanisms of influence (i.e. filing shareholder proposals) and relationship investing. Institutional owners included private and public pension funds, mutual funds, bank trusts, insurance companies, endowments, and foundations. These institutional owners differ substantially, and these differences lead institutions to use their ownership power to pursue different philosophies and actions. Some institutions follow a passive governance policy, While others adopt an activist role. This book seeks to answer four questions: (1) Are institutional owners actively involved in the strategic affairs of companies in their portfolios? (2)Which forms of activism do institutional owners employ (either confrontational mechanisms, such as filing shareholder proposals, or relationship building mechanisms)? (3)Which forms of activism employed are most effective? and (4) Does the institutional type affect its pursuit of shareholder activism? In answering these questions the author suggests new important results that in many cases are contrary to what prior reports of the activities by a small number of institutional owners may intimate.
Book Synopsis Public Pension Fund Activism in Corporate Governance Reconsidered by : Roberta Romano
Download or read book Public Pension Fund Activism in Corporate Governance Reconsidered written by Roberta Romano and published by . This book was released on 1993 with total page 59 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Governance of Public Pension Funds by : David Hess
Download or read book Governance of Public Pension Funds written by David Hess and published by World Bank Publications. This book was released on 2003 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: An understanding of corporate governance theory can promote the adoption of appropriate governance tools to limit agency problems in public pension fund management. The absence of a market for corporate control hinders the translation of lessons from the private sector corporate world to public pension governance. The establishment of a fit, and proper governing body for public pension funds, thus may be even more important than the maintenance of a comparable body for private sector corporations. In particular, behavioral controls should be carefully designed.
Download or read book Hedge Fund Activism written by Alon Brav and published by Now Publishers Inc. This book was released on 2010 with total page 76 pages. Available in PDF, EPUB and Kindle. Book excerpt: Hedge Fund Activism begins with a brief outline of the research literature and describes datasets on hedge fund activism.
Book Synopsis Institutional Shareholder Activism by : Michael J. Rubach
Download or read book Institutional Shareholder Activism written by Michael J. Rubach and published by Taylor & Francis. This book was released on 1999 with total page 202 pages. Available in PDF, EPUB and Kindle. Book excerpt: First Published in 2000. Routledge is an imprint of Taylor & Francis, an informa company.
Book Synopsis Public Pension Fund Ownership and Firm Performance by : Yawen Jiao
Download or read book Public Pension Fund Ownership and Firm Performance written by Yawen Jiao and published by . This book was released on 2012 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Equity ownership by public pension funds (PPFs) has been widely used in the existing literature (see, among others, Cremers and Nair, 2005; and Dittmar and Mahrt-Smith, 2007) to measure the strength of shareholder monitoring/governance. This paper raises caution about such practices by illustrating that there is an inverted-U shape relationship between PPF ownership and firms' future performance, as measured by short-term and long-term stock returns and operating performance: during 1985 to 2005, future performance first increases, then declines in aggregate equity ownership by PPFs. These results suggest: First, shareholder value considerations and political interests/pressures co-exist for PPF managers. Second, PPFs' presence is consistent with shareholders value maximization when they have moderate influence on firm management, whereas excessive PPF ownership facilitates PPF managers' pursuits for political interests and destroys shareholder value. Finally, it is necessary to impose an upper bound to PPF ownership in using it to proxy for the strength of shareholder monitoring/governance.
Book Synopsis Politics and Public Pension Funds by : Roberta Romano
Download or read book Politics and Public Pension Funds written by Roberta Romano and published by . This book was released on 1994 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Institutional Investors and Corporate Governance by : Yong Wang
Download or read book Institutional Investors and Corporate Governance written by Yong Wang and published by . This book was released on 2010 with total page 166 pages. Available in PDF, EPUB and Kindle. Book excerpt: The role of Institutional investors in alleviating the agent problem of management and its valuation effect has been studied extensively in corporate finance. We complement this stream of research by exploring management's control over institutional investors with misaligned objectives, particularly public pension fund, and the consequential valuation effect. We investigate the politic motive of public pension fund's shareholder activism and its impact on the target firms' operational performance, address the control of a strong management on public pension funds' self-serving agenda, and finally we compare the ownership adjustment pattern of public pension funds to other institutional investors to conclude public pension funds' ownership adjustment reflects their private pursuit. The first chapter explores the politic facet and performance effect of shareholder activism sponsored by public pension fund. In this study, we show that having a public pension fund as the leading sponsor of a shareholder proposal significantly improves the proposal's likelihood of being accepted by the target firm. The increased acceptance rate sources from the subset of proposals addressing a social responsibility issue, and targeting firms with weak insider control. An investigation of the public pension board reveals that the board's political profile is the primary determinant of public pension fund's propensity to lead a proposal, and the target firm's acceptance rate. We also assess the performance impact of shareholder proposals. For target firms with strong insider control, the performance impact of accepted social responsibility proposals is significantly positive; that of governance proposals is negligible. For target firms with weak insider control, the performance impact associated with public pension funds is either negative or negligible. These results suggest that the motive driving public pension funds' dominant presence in shareholder activism is not market based, but laden with purpose other than value creation. In the second chapter, we postulate that the widely documented negative valuation effect of ownership by public pension will be weak on firms with extra managerial control mechanism and/or whose managerial ownership of cash flow is high. For firms with high level managerial ownership of cash flow, management bears higher cost for a concession made with public pension fund's misaligned objective. An efficient market will expect this effect and value the managerial control over public pension fund to the extent that the management's benefit is aligned with outside shareholders. Consequently, the cross section valuation difference of firms held by public pension funds can be explained by the managerial ownership of cash flow, managerial control derived from extra mechanism such as dual class share, however, has no explanative power. The last chapter investigates the link between private benefits and institutional holding change. We assume the cross section equilibrium of block holding will break when market sentiment is high. Consequently, block holder tends to shed more shares loaded with less private benefits by taking advantage of opportunities available in a high sentiment market. The empirical results support this conjecture. When the market sentiment is high, Institutional block holders tend to shed more private benefits meager dual-class share than private benefits affluent non-dual class share. This pattern does not exist when the market sentiment is low. Most importantly, public pension fund is identified as the major driver of this effect.
Book Synopsis Pension Fund Activism and Pay for Long-Term Firm Performance - Should Executive Compensation Also be Tied to Employee Well-Being to Ensure Sustainability? by : Alberto Salazar
Download or read book Pension Fund Activism and Pay for Long-Term Firm Performance - Should Executive Compensation Also be Tied to Employee Well-Being to Ensure Sustainability? written by Alberto Salazar and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper discusses pension fund activism and the use of executive compensation as a financial incentive to align the behavior of executives with long-term firm performance. It explores the merits of broadening a performance metric that can go beyond traditional shareholder value maximization objectives and integrate employees' interest in the context of liberal market economies. This work argues that active pension funds may adopt a broader view of performance that incorporates employee welfare and thus promote the tying of executive pay to improvements in employees' interests. As shareholder value, firm profitability and executive pay increase, executives should make gradual progress on improving employees' income (e.g. living wages, bonus), productivity and innovation, job security, healthy and safe work environment, equality and pension contributions. This is desirable as it will ensure the long-term sustainability of companies and society at large, which will ultimately secure and maximize the financial returns and non-financial benefits for pension funds' beneficiaries. To that end, pension funds may consider encouraging the use of clawback policies to recoup executive compensation when executives fail to integrate employees' interest into a company's performance metric. While such policies depend on the success of shareholder proposals, pension fund activism seeking to introduce such clawback policies is likely to be more successful with both the recent expansion of directors' fiduciary duties that requires directors to serve the interests of, inter alia, employees and the widely accepted environmental, social and governance (ESG) expectations. This is so because such clawback policy proposals will expose directors to potential liability if they ignore their fiduciary duty towards employees. Ultimately, a clawback policy that incorporates employees' interests into pay for performance will make a significant contribution to long-term firm performance, employee wellbeing and the overall sustainability of society. This paper uses examples from two liberal economies, namely US and Canada, to illustrate the argument.
Book Synopsis Public Pension Fund Activism and M&A Activity by : Lily Xiaoli Qiu
Download or read book Public Pension Fund Activism and M&A Activity written by Lily Xiaoli Qiu and published by . This book was released on 2008 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper shows that firms engage in less Mamp;A activity when they have large public pension fund (PPF) owners. For example, the presence of a 5% PPF blockholder reduces the frequency of acquisitions by about 7%. An extra 3% in ownership by the top PPF owner reduces the size of acquisition (measured as a fraction of acquiror value) by about 3%. The effect is stronger when PPF ownership is more concentrated and when firms suffer from greater agency conflicts. The presence of other types of institutions and managerial compensation has no Mamp;A reducing effect. These findings suggest that public pension funds play an important and unusual role in corporate governance.
Book Synopsis The Effects of Pension Fund Activism on Corporate Performance by : James Darrell Woods
Download or read book The Effects of Pension Fund Activism on Corporate Performance written by James Darrell Woods and published by . This book was released on 1996 with total page 124 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Public Pensions and the Promise of Shareholder Activism for the Next Frontier of Corporate Governance by :
Download or read book Public Pensions and the Promise of Shareholder Activism for the Next Frontier of Corporate Governance written by and published by . This book was released on 2007 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Institutional Investor Activism by : William Bratton
Download or read book Institutional Investor Activism written by William Bratton and published by OUP Oxford. This book was released on 2015-08-20 with total page 924 pages. Available in PDF, EPUB and Kindle. Book excerpt: The past two decades has witnessed unprecedented changes in the corporate governance landscape in Europe, the US and Asia. Across many countries, activist investors have pursued engagements with management of target companies. More recently, the role of the hostile activist shareholder has been taken up by a set of hedge funds. Hedge fund activism is characterized by mergers and corporate restructuring, replacement of management and board members, proxy voting, and lobbying of management. These investors target and research companies, take large positions in `their stock, criticize their business plans and governance practices, and confront their managers, demanding action enhancing shareholder value. This book analyses the impact of activists on the companies that they invest, the effects on shareholders and on activists funds themselves. Chapters examine such topic as investors' strategic approaches, the financial returns they produce, and the regulatory frameworks within which they operate. The chapters also provide historical context, both of activist investment and institutional shareholder passivity. The volume facilitates a comparison between the US and the EU, juxtaposing not only regulatory patterns but investment styles.
Book Synopsis Shareholder Activism by Public Pension Funds and the Rights of Dissenting Employees Under the First Amendment by : Eric Alden
Download or read book Shareholder Activism by Public Pension Funds and the Rights of Dissenting Employees Under the First Amendment written by Eric Alden and published by . This book was released on 2015 with total page 78 pages. Available in PDF, EPUB and Kindle. Book excerpt: Public pension funds enjoy significant voting power in the U.S. publicly traded corporations by virtue of the aggregated retirement assets at their disposal. Many funds are engaged in a concerted drive to assert shareholder control rights with respect to such corporations and to effect a host of environmental, social, and governance reforms in American business. Although many public-sector employees may applaud the goals and objectives of these public pension funds, not all will. This Article argues that dissenting employees whom the law compels to contribute to such funds have a First Amendment right to object to having their pro rata portion of publicly traded shares held by such funds voted by fund administrators for the purpose of advancing goals of a political or ideological nature not germane to the fund's core mission of providing retirement benefits to participants. This argument, which has not been addressed by courts or the academic literature, would extend firmly established First Amendment caselaw to a novel area of application.In making this argument, this Article addresses the Supreme Court's developing government speech doctrine, under which citizens may challenge compelled support of private speech but have no First Amendment right not to fund government speech. The Article argues that the political and ideological activities of a public pension fund, at least in the case of the leading public pension fund, CalPERS, should be treated as those of the public pension fund itself, and not ascribed to the state, for purposes of the First Amendment. The Article suggests using an “independent instrumentality” test to ascertain whether the relevant legislature has by statute created a body not subject to effective control by the executive branch of government, such that courts should not attribute the instrumentality's political and ideological activities to the government for the purposes of the government speech doctrine.
