Pension Reform And Corporate Governance: Impact In Chile
AbstractThe influence of Chilean pension fund management organizations (AFPs) on corporate governance has been shaped by regulations and by three characteristics of the local market, namely: lack of liquidity; high ownership concentration; and high visibility of AFP investment decisions. AFPs began to invest in stocks in 1985, and have behaved since as active shareholders. Pension fund participation in the stock market has had positive effects on corporate governance: 1) The number of independent board members has increased. 2) Monitoring costs have decreased as a result of improved public information quality. 3) Companies where pension funds have invested are under close public scrutiny. 4) Shareholder meetings are becoming more relevant. 5) Bondholder protection has also improved. Capital market growth has also had positive consequences on corporate governance. Economies of scale have made possible a new research industry, which has helped to reduce information costs. Also, market financing has become more attractive for firms. Capital market regulation has also improved and risk-rating procedures and conflict of interests regulations have been introduced in the legislation. All these changes have widened the investor base. However, other regulations and some ambiguities in the legislation impede pension funds to better monitor corporations, other than participating in shareholder meetings.
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Bibliographic InfoArticle provided by Escuela de Administracion. Pontificia Universidad Católica de Chile. in its journal ABANTE.
Volume (Year): 3 (2000)
Issue (Month): 1 ()
Pages: 109- 141
Find related papers by JEL classification:
- G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
- G30 - Financial Economics - - Corporate Finance and Governance - - - General
- K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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