Chapter

Pension Fund Activism: The Double‐Edged Sword

Brad M. Barber

in The Future of Public Employee Retirement Systems

Published in print August 2009 | ISBN: 9780199573349
Published online February 2010 | e-ISBN: 9780191721946 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780199573349.003.0015
Pension Fund Activism: The Double‐Edged Sword

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Many public pension funds engage in activism by using their pooled ownership of stock to affect changes in the corporations they own. The merits of activism depend on (1) the conflicts of interest between corporate managers and shareholders, and (2) the conflicts of interest between portfolio managers and investors. These conflicts lead to two types of activism: shareholder activism and social activism. Portfolio managers can use their position to monitor conflicts that might arise between managers and shareholders (shareholder activism), but they can also abuse their position by pursuing actions that advance their own moral values or political interests at the expense of investors (social activism).

Keywords: pension abnormal returns; California Public Employee Retirement System; corporate governance; asset divesture; Focus List firms; institutional activism; portfolio managers; shareholder activism

Chapter.  9011 words.  Illustrated.

Subjects: Public Management and Administration

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