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Public Pension Fund Activism and M&A Activity

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  • Lily Qiu

    (Yale University, International Center for Finance)

Abstract

This paper shows that firms engage in less M&A activity when they have large public pension fund (PPF) owners. For example, the presence of a 5% PPF blockholder reduces the frequency of acquisitions by about 7%. An extra 3% in ownership by the top PPF owner reduces the size of acquisition (measured as a fraction of acquiror value) by about 3%. The effect is stronger when PPF ownership is more concentrated and when firms suffer from greater agency conflicts. The presence of other types of institutions and managerial compensation has no M&A reducing effect. These findings suggest that public pension funds play an important and unusual role in corporate governance.

Suggested Citation

  • Lily Qiu, 2003. "Public Pension Fund Activism and M&A Activity," Yale School of Management Working Papers ysm398, Yale School of Management.
    • Handle: RePEc:ysm:somwrk:ysm398
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    Cited by:

    1. Agnes Cheng, C.S. & He Huang, Henry & Li, Yinghua & Lobo, Gerald, 2010. "Institutional monitoring through shareholder litigation," Journal of Financial Economics, Elsevier, vol. 95(3), pages 356-383, March.
    2. Elyasiani, Elyas & Jia, Jingyi Jane, 2008. "Institutional ownership stability and BHC performance," Journal of Banking & Finance, Elsevier, vol. 32(9), pages 1767-1781, September.

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