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The Systemic Governance Influence of Expectation Documents: Evidence from a Universal Owner

Author

Listed:
  • Ruth V Aguilera
  • Vicente J Bermejo
  • Javier Capapé
  • Vicente Cuñat

Abstract

We examine expectation documents’ effectiveness as an activism tool. We use the Norwegian sovereign wealth fund’s release of a corporate governance expectation document as a natural experiment. We introduce a novel, three-way analytical decomposition of the firms, the fund, and their joint response to this document. Firms’ governance practices adapt to the fund’s new portfolio-wide governance preferences, with heterogeneous responses across ownership and firm characteristics. The fund’s investment policies also change, even at the expense of financial returns. Overall, our research demonstrates the potential effectiveness of expectation documents as an emerging, low-cost activism tool for universal investors. (JEL F30, G32, G34)

Suggested Citation

  • Ruth V Aguilera & Vicente J Bermejo & Javier Capapé & Vicente Cuñat, 2025. "The Systemic Governance Influence of Expectation Documents: Evidence from a Universal Owner," The Review of Corporate Finance Studies, Society for Financial Studies, vol. 14(2), pages 372-407.
    • Handle: RePEc:oup:rcorpf:v:14:y:2025:i:2:p:372-407.
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    File URL: http://hdl.handle.net/10.1093/rcfs/cfae009
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    More about this item

    JEL classification:

    • F30 - International Economics - - International Finance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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