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Pension Fund Activism and Firm Performance

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Author Info
Wahal, Sunil
Abstract

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 nonproxy 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 nonproxy proposal targeting, however, experiences 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.

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Publisher Info
Article provided by Cambridge University Press in its journal Journal of Financial and Quantitative Analysis.

Volume (Year): 31 (1996)
Issue (Month): 01 (March)
Pages: 1-23
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:cup:jfinqa:v:31:y:1996:i:01:p:1-23_00

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  1. Carine Girard, 2004. "L’incidence de l’activisme actionnarial sur les mécanismes de gouvernance:le cas français," Revue Finance Contrôle Stratégie, Editions Economica, vol. 7(3), pages 91-116, September. [Downloadable!]
  2. Su Han Chan & Wai Kin Leung & Ko Wang, 1998. "Institutional Investment in REITs: Evidence and Implications," Journal of Real Estate Research, American Real Estate Society, vol. 16(3), pages 357-374. [Downloadable!]
  3. Ariane Chapelle & Ariane Szafarz, 2006. "Control consolidation with a threshold: An algorithm," Working Papers CEB 06-007.RS, Université Libre de Bruxelles, Solvay Brussels School of Economics and Management, Centre Emile Bernheim (CEB). [Downloadable!]
    Other versions:
  4. Roberta Romano, 2002. "Does Confidential Proxy Voting Matter?," NBER Working Papers 9126, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  5. Roberta Romano, 2002. "Does Confidential Proxy Voting Matter?," Berkeley Olin Program in Law & Economics, Working Paper Series 1074, Berkeley Olin Program in Law & Economics. [Downloadable!]
  6. E Philip Davis, 2005. "The Role Of Pension Funds As Institutional Investors In Emerging Markets," Economics and Finance Discussion Papers 05-18, Economics and Finance Section, School of Social Sciences, Brunel University. [Downloadable!]
  7. Andrew Ellul & Levent Guntay & Ugur Lel, 2007. "External governance and debt agency costs of family firms," International Finance Discussion Papers 908, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
  8. Gary Gorton & Matthias Kahl, 2001. "The Scarcity of Effective Monitors and Its Implications For Corporate Takeovers and Ownership Structures," University of California at Los Angeles, Anderson Graduate School of Management 1088, Anderson Graduate School of Management, UCLA. [Downloadable!]
  9. Lili Qiu, 2004. "Which Institutional Investors Monitor? Evidence from Acquisition Activity," Working Papers 2004-21, Brown University, Department of Economics. [Downloadable!]
  10. Yuan, Rongli & Milonas, Nikolaos & Xiao, Jason Zezhong, 2006. "The Role of Financial Institutions in the Corporate Governance of Listed Chinese Companies," Cardiff Accounting and Finance Working Papers A2006/3, Cardiff University, Cardiff Business School, Accounting and Finance Section. [Downloadable!]
  11. Jong, A. de & Mertens, G.M.H. & Roosenboom, P.G.J., 2004. "Shareholders’ Voting at General Meetings: Evidence from the Netherlands," Research Paper ERS-2004-039-F&A Revision, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus Uni. [Downloadable!]
  12. Lily Qiu, 2005. "Managerial Reputation Concerns, Outside Monitoring, and Investment Efficiency," Working Papers 2005-08, Brown University, Department of Economics. [Downloadable!]
  13. Abe Jong & Gerard Mertens & Peter Roosenboom, 2006. "Shareholders’ Voting at General Meetings: Evidence from the Netherlands," Journal of Management and Governance, Springer, vol. 10(4), pages 353-380, November. [Downloadable!] (restricted)
  14. E Philip Davis & Yuwei Hu, 2004. "Is There A Link Between Pension-Fund Assets And Economic Growth? - A Cross-Country Study," Economics and Finance Discussion Papers 04-23, Economics and Finance Section, School of Social Sciences, Brunel University. [Downloadable!]
    Other versions:
  15. Stephen Choi, 2000. "Proxy Issue Proposals: Impact of the 1992 Proxy SEC Proxy Reforms," Berkeley Olin Program in Law & Economics, Working Paper Series 1005, Berkeley Olin Program in Law & Economics. [Downloadable!]
  16. Jason Kotter & Ugur Lel, 2008. "Friends or foes? The stock price impact of sovereign wealth fund investments and the price of keeping secrets," International Finance Discussion Papers 940, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
  17. Carlos F. alves & Victor Mendes, 2005. "Institutional Investor Activism: Does the Portfolio Management Skill Matter?," FEP Working Papers 184, Universidade do Porto, Faculdade de Economia do Porto. [Downloadable!]
  18. Susan E. K. Christoffersen & Christopher C. Geczy & David K. Musto & Adam V. Reed, 2004. "How and Why do Investors Trade Votes, and What Does it Mean?," CIRANO Working Papers 2004s-23, CIRANO. [Downloadable!]
  19. Gillan, Stuart L. & Starks, Laura T., 2002. "Institutional Investors, Corporate Ownership, and Corporate Governance: Global Perspectives," Working Papers UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
  20. Gary Gorton & Matthias Kahl, 2002. "The Scarcity of Effective Monitors and Its Implications For Corporate Takeovers and Ownership Structures," Center for Financial Institutions Working Papers 02-30, Wharton School Center for Financial Institutions, University of Pennsylvania. [Downloadable!]
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