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The influence of pension funds on corporate governance

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  • Andreas Sch䦥r
  • Urs von Arx

Abstract

Although pension funds have gained importance in the last two decades, their role has not been described in detail by economic models. This article focuses on the scope of these institutional investors when they are not satisfied with a management team of a company in which the pension fund holds a block of shares. Stock holdings by pension funds are largely dispersed. Therefore, any intervention by pension funds in corporate governance requires the formation of a coalition of pension funds. The realization of a coordinated intervention, in turn, is subject to the problems related to the provision of public goods, such as free riding. We find that the stock dispersion and the combined share of pension funds, coordination costs and the attractiveness of the exit option are relevant factors for determining the probability of the success of interventions.

Suggested Citation

  • Andreas Sch䦥r & Urs von Arx, 2014. "The influence of pension funds on corporate governance," Applied Economics, Taylor & Francis Journals, vol. 46(19), pages 2316-2329, July.
    • Handle: RePEc:taf:applec:v:46:y:2014:i:19:p:2316-2329
    DOI: 10.1080/00036846.2014.899670
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    References listed on IDEAS

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    1. Jean Tirole, 2006. "The Theory of Corporate Finance," Post-Print hal-00173191, HAL.
    2. Bikker, Jacob A. & Spierdijk, Laura & van der Sluis, Pieter Jelle, 2007. "Market impact costs of institutional equity trades," Journal of International Money and Finance, Elsevier, vol. 26(6), pages 974-1000, October.
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    Cited by:

    1. Marcos Vizcaíno-González & Susana Iglesias-Antelo & Noelia Romero-Castro, 2019. "Assessing Sustainability-Related Systematic Reputational Risk through Voting Results in Corporate Meetings: A Cross-Industry Analysis," Sustainability, MDPI, vol. 11(5), pages 1-11, March.

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