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.

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.

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.

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.

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:

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.

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.

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.

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:

Download or read book The Motivation and Impact of Pension Fund Activism written by Diane Del Guercio and published by . This book was released on 2010 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: Pension funds have become increasingly active in the governance of companies in which they own stock. A common form of activism includes the submission of shareholder proposals to the corporate proxy statement. This study examines the impact and motivation of pension fund activism by studying the targets of the largest, most active funds from 1987 through 1993. Previous studies show that shareholder proposals are associated with negligible shareholder wealth effects, which some attribute to personal publicity or political motivations associated with public funds. We argue that a proper assessment of fund motivation and impact requires recognition of the heterogeneity across pension funds in investment strategies, and activism objectives and tactics. In addition, due to event date uncertainty common to shareholder proposals, a more powerful method of measuring impact is useful; we measure the effectiveness of the funds in generating significant changes in target company policies. Relative to a performance, size and industry matched control sample, we find that companies receiving pension fund proposals subsequently experience a higher frequency of governance events such as shareholder lawsuits, and responsive corporate policies such as asset sales, restructurings, and layoffs. We also show that variation in impact across target firms is related to fund heterogeneity. We conclude that the funds are more successful at monitoring target firms than previously recognized, and find no evidence to support motivations other than fund value maximization.

Download or read book The Rise of the Working Class Shareholder written by David Webber and published by Harvard University Press. This book was released on 2018-04-02 with total page 351 pages. Available in PDF, EPUB and Kindle. Book excerpt: When Steven Burd, CEO of the supermarket chain Safeway, cut wages and benefits, starting a five-month strike by 59,000 unionized workers, he was confident he would win. But where traditional labor action failed, a novel approach was more successful. With the aid of the California Public Employees’ Retirement System, a $300 billion pension fund, workers led a shareholder revolt that unseated three of Burd’s boardroom allies. In The Rise of the Working-Class Shareholder: Labor's Last Best Weapon, David Webber uses cases such as Safeway’s to shine a light on labor’s most potent remaining weapon: its multitrillion-dollar pension funds. Outmaneuvered at the bargaining table and under constant assault in Washington, state houses, and the courts, worker organizations are beginning to exercise muscle through markets. Shareholder activism has been used to divest from anti-labor companies, gun makers, and tobacco; diversify corporate boards; support Occupy Wall Street; force global warming onto the corporate agenda; create jobs; and challenge outlandish CEO pay. Webber argues that workers have found in labor’s capital a potent strategy against their exploiters. He explains the tactic’s surmountable difficulties even as he cautions that corporate interests are already working to deny labor’s access to this powerful and underused tool. The Rise of the Working-Class Shareholder is a rare good-news story for American workers, an opportunity hiding in plain sight. Combining legal rigor with inspiring narratives of labor victory, Webber shows how workers can wield their own capital to reclaim their strength.

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:

Download or read book Great Expectations from Pension Fund Activism written by Agnieszka Slomka-Golebiowska and published by . This book was released on 2013 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines private pension funds' preferences for shareholder activism in Poland in closely-held firms that dominate stock exchanges in emerging markets. The results show that the major institutional investors engage in a limited spectrum of shareholder activities. Most often they seek to contact the company's management board members as well as supervisory board members if they are dissatisfied with a portfolio company. None of the funds even considers public criticism or litigation. The form of shareholder activism selected by different funds and the sequence do not vary substantially. The reasons lie in the internal benchmark. However, the largest pension funds tend to be more active than the rest. They choose low-cost and low-risk forms of activism, but they hardly participate in any corporate governance organizations. They avoid highly visible and confrontational activities.

Download or read book The Foundations and Anatomy of Shareholder Activism written by Iris H-Y Chiu and published by Bloomsbury Publishing. This book was released on 2010-10-12 with total page 204 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Foundations and Anatomy of Shareholder Activism examines the landscape of contemporary shareholder activism in the UK. The book focuses on minority shareholder activism in publicly listed companies. It argues that contemporary shareholder activism in the UK is dominated by two groups; one, the institutional shareholders whose shareholder activism is largely seen as a driving force for good corporate governance, and two, the hedge funds whose shareholder activism is based on value extraction and exit. The book provides a detailed examination of both types of shareholder activism, and discusses critically the nature of, motivations for and consequences following both types of shareholder activism. The book then locates both types of shareholder activism in the theory of the company and the fabric of company law, and argues that institutional shareholder activism based on exercising a voice at general meetings is well supported in theory and law. The call for institutions to engage in more informal forms of activism in the name of 'stewardship' may bring about challenges to the current patterns of activism that institutions engage in. The book argues, however, that a more cautious view of hedge fund activism and the pattern of value extraction and exit should be taken. More empirical evidence is likely to be necessary, however, to weigh up the long terms benefits and costs of hedge fund activism.

Download or read book Hedge Fund Activism in Japan written by John Buchanan and published by Cambridge University Press. This book was released on 2012-05-24 with total page 389 pages. Available in PDF, EPUB and Kindle. Book excerpt: Hedge fund activism is an expression of shareholder primacy, an idea that has come to dominate discussion of corporate governance theory and practice worldwide over the past two decades. This book provides a thorough examination of public and often confrontational hedge fund activism in Japan in the period between 2001 and the full onset of the global financial crisis in 2008. In Japan this shareholder-centric conception of the company espoused by activist hedge funds clashed with the alternative Japanese conception of the company as an enduring organisation or a 'community'. By analysing this clash, the book derives a fresh view of the practices underpinning corporate governance in Japan and offers suggestions regarding the validity of the shareholder primacy ideas currently at the heart of US and UK beliefs about the purpose of the firm.

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.

Download or read book Three Essays On Corporate Control written by Ning Pu and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Chapter 1 compares and contrasts the activism styles and outcomes of hedge-fund activists versus traditional institutional activists in an attempt to understand what drives the returns of institutional activism. Contrary to the popular belief that hedge-fund activism is designed to achieve a short-term payoff at the expense of long-term profitability, I find some evidence consistent with the hypothesis that hedge-fund activists can be effective monitors, especially when multiple hedge funds collaborate on the monitoring efforts. This result is supported by examining the relations between the holdings by different types of hedge-fund activists and the outcomes of proposed MandA deals, such as acquirer announcement-period CARs, buy-and-hold abnormal returns, acquirer long-run operating performance, means of financing, deal status, and deal attitude. On the other hand, hedge funds that carry out individualistic activism efforts don't appear to exert effective monitoring efforts in the context of MandAs. Concurring with the previous studies on pension-fund activism, this paper finds that traditional institutional activists, as represented by activist pension funds and several activist mutual funds, tend to be effective monitors of MandA acquirers. Additionally, cross-holding analysis of the two groups of institutional activists (hedge funds vs. non-hedge funds) provides further evidence corroborative of the hypothesis that cross-holding activists who realize gains in both acquirers and targets tend to be effective monitors at the first place. Chapter 2 examines an expanded version of acquisition probability hypothesis proposed by Song and Walkling (2000). In contrast to the previous papers that find positive rival announcement-period abnormal returns, I find only rivals associated with value-creating deals experience positive announcement-period abnormal returns. In addition to studying the announcement-period abnormal returns, I also analyze the extent of impact on rivals around deal terminations and deal completions. The results show that rivals that experience higher announcement-period abnormal returns also tend to experience higher termination-period and completion-period returns, consistent with the predictions of the acquisition probability hypothesis. More direct tests of the hypothesis confirm that the rival announcement-period CARs are positively and significantly associated with the predicted probability of rivals becoming subsequent targets, and thus providing direct evidence corroborative of the acquisition probability hypothesis. Chapter 3 studies the impact of CalPERS Focus List (CFL) program have on bondholders' wealth. In contrast to the extant research documenting positive abnormal returns to shareholders of the firms subject to pension fund activism, I find that CalPERS Focus List (CFL) program significantly reduces existing bondholders' wealth. In the year subsequent to the releases of CalPERS' Focus List, 57% of outstanding bonds of target firms underwent downgrade. Additionally, I find evidence of an expropriation of wealth from the bondholder to the shareholder based on long-horizon analysis. The source of wealth transfer from bondholders to stockholders appear to come from rapid asset sales of the CFL firms following the targeting.