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When does CalPERS’ activism add value?

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  • Thomas Smythe
  • Chris McNeil
  • Philip English

Abstract

The California Public Employees’ Retirement System (CalPERS) is a pioneer of shareholder activism and a leading proponent of governance reform among public pension funds. We examine factors (such as board structure, ownership structure, past performance, and size of target firms, as well as proposed governance reform) that may be associated with the value of CalPERS’ activism. The results can be useful in guiding institutional governance efforts in the future. The results show that poor prior performance, smaller firm size, and a larger board are associated with greater announcement period returns. In addition, there is weak evidence of greater announcement returns when the board includes a greater number of insiders, CEO ownership is high, and director and officer (excluding CEO) ownership is low. Copyright Springer Science+Business Media New York 2015

Suggested Citation

  • Thomas Smythe & Chris McNeil & Philip English, 2015. "When does CalPERS’ activism add value?," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 39(4), pages 641-660, October.
    • Handle: RePEc:spr:jecfin:v:39:y:2015:i:4:p:641-660
    DOI: 10.1007/s12197-013-9269-8
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    1. Bajzik, Josef, 2023. "Is the role of shareholder activism in corporate governance overestimated?," Finance Research Letters, Elsevier, vol. 58(PC).

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    More about this item

    Keywords

    Corporate governance; Shareholder activism; Pension funds; G34; G23; G14;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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