Are pension funds good monitors?

Sonza, Igor Bernardi; Granzotto, Alberto

doi:10.1016/j.rauspm.2017.06.003

Cited by 8 publications

(14 citation statements)

References 53 publications

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“…Yet, the evidence about the positive outcomes of engagements and activism is still not conclusive (Denes, Karpoff, & McWilliams, 2017;Aggarwal, Erel, Ferreira, & Matos, 2011;Gillan & Starks, 2007). This is also the case in Brazil, even after recent changes that encourage activism, such a gradual reduction in ownership concentration and new laws, regulations, and self-regulations (de Almeida & Leal, 2020; Maranho, Bortolon, & Leal, 2020; Collares, 2020; Sonza & Granzotto, 2018).…”

Section: Introductionmentioning

confidence: 99%

“…The lack of expertise required for effective monitoring may also be one of the reasons for the apparent ineffectiveness of activism (Gillan & Starks, 2003). The low activism of institutional investors in Brazil suggests that maybe these and other factors, such as ownership concentration, ineffective institutions, and portfolio diversification motivations, prevent it (de Almeida & Leal, 2020; Vargas, Bortolon, Barros, & Leal, 2018; Sonza & Granzotto, 2018;Pereira & Leal, 2018). Finally, the difficulty to empirically verify a relationship between activism and CG can be attributed to the limitations of the methods and data employed in quantitative studies, particularly in Brazil (Maranho et al, 2020;Collares, 2020;Becht, Franks, Mayer, & Rossi, 2009;Gillan & Starks, 2007).…”

Section: Introductionmentioning

confidence: 99%

“…Even though the initial evidence indicated a positive impact of their activism on the creation of shareholder value, the methods used to reach the results were questioned, leading to more recent inconclusive results about value creation (Becht et al, 2009). In Brazil, the institutional investors related to the state have also been the subject of several studies that did not find conclusive evidence that their presence as shareholders resulted in better CG practices or performance, even though these studies did not address their activism per se (Sonza & Granzotto, 2018;De Oliveira, Leal, & Almeida, 2012;Punsuvo, Kayo, & Barros, 2007).…”

Section: Introductionmentioning

confidence: 99%

“…High ownership concentration, however, hindered activism through internal CG mechanisms, leading activists to resort to external mechanisms, such as using regulations in administrative proceedings or the courts, in order to uphold their interests. Even so, these external mechanisms were not completely capable of protecting the interests of shareholders and limited the effectiveness of their activism, constituting one of the possible reasons why the presence of an institutional investor related to the state did not influence the quality of CG practices or performance of the investee companies reported elsewhere (Sonza & Granzotto, 2018;De Oliveira et al, 2012).…”

Section: Introductionmentioning

confidence: 99%

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Principal-principal conflicts leading to activism of a large government-owned investor in Brazil

Duarte

Leal

2021

CGOBR

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This article analyzes conflicts between principals that led to activism by one large Brazilian government-owned investor as a minority shareholder and verifies the antecedents, means employed, apparent motivations, and effectiveness of its reactions (Goranova & Ryan, 2014). It examines the cases of three large high ownership concentration listed companies using solely public sources. Poor performance was a frequent conflict antecedent. No evident trade-off between activism and corporate governance (CG) practices emerged. High ownership concentration influenced the way the investor reacted and its success because opposition through internal CG mechanisms was usually not successful and led to legal proceedings. The limitations of the regulatory framework became evident from the mixed outcomes of these proceedings. The investor was not exclusively financially motivated and it occasionally opposed the interests of other minority shareholders to follow government policy. These findings illustrated how high ownership concentration rendered difficult the mitigation of principal-principal conflicts even for a large government-owned investor and help explain the failure of previous econometric studies to relate activism, quality of CG practices and performance (Young, Peng, Ahlstrom, Bruton, & Jiang, 2008)

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Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Principal-principal conflicts leading to activism of a large government-owned investor in Brazil

Duarte

Leal

2021

CGOBR

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“…Numerous scholars have investigated pension funds, such as Jackowicz & Kowalewski (2012), Handoko (2015), Jackwerth & Slavutskaya (2016), and Sonza & Granzotto (2018). However, these studies tend to focus on pension funds' performance and overlook investment efficiency.…”

Section: Introductionmentioning

confidence: 99%

Does ownership moderate the effects of size on pension funds’ efficiency and investment performance?

Putri

Sakti

Atahau

2020

Jurnal Keuangan Dan Perbankan

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This study aims to explore the effect of specific characteristics of pension funds: size, efficiency, and ownership on pension fund performance. Specifically, it aims to obtain empirical evidence of whether pension fund ownership moderates the effect of size and efficiency on pension fund performance. We use annual financial statements obtained from the Indonesian Pension Fund Association (ADPI) for the period 2013-2017. The sampling technique generates the final sample of 167 pension funds and number of observations 835 firm-year. Using panel regression, we find that pension fund size has no significant positive effect on pension funds efficiency and investment performance. In addition, ownership does not moderate the effect of pension fund size on the efficiency and investment performance of pension funds. We suggest that large pension funds do not necessarily generate revenues higher than investment costs. Hence, our results inform the Financial Service Authority (FSA) to encourage pension funds to utilize their large size to generate higher revenues and exhibit more positive performance. Abstrak Penelitian ini bertujuan untuk mengetahui pengaruh karakteristik tertentu dari dana pensiun: ukuran, efisiensi, dan kepemilikan terhadap kinerja dana pensiun. Secara khusus, ini bertujuan untuk mendapatkan bukti empiris apakah kepemilikan dana pensiun memoderasi pengaruh ukuran dan efisiensi terhadap kinerja dana pensiun. Kami menggunakan laporan keuangan tahunan yang diperoleh dari Asosiasi Dana Pensiun Indonesia (ADPI) untuk periode 2013-2017. Teknik pengambilan sampel menghasilkan sampel akhir 167 dana pensiun dan jumlah observasi 835 firm-year. Dengan menggunakan regresi panel, kami menemukan bahwa ukuran dana pensiun tidak berpengaruh positif signifikan terhadap efisiensi dana pensiun dan kinerja investasi. Selain itu, kepemilikan tidak memoderasi pengaruh ukuran dana pensiun terhadap efisiensi dan kinerja investasi dana pensiun. Kami menyarankan bahwa dana pensiun yang besar belum tentu menghasilkan pendapatan yang lebih tinggi dari biaya investasi. Karenanya, hasil kami menginformasikan Otoritas Jasa Keuangan (OJK) untuk mendorong dana pensiun memanfaatkan ukurannya yang besar untuk menghasilkan pendapatan yang lebih tinggi dan menunjukkan kinerja yang lebih positif.

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The evolution of corporate governance and agency control: the effectiveness of mechanisms in creating value for companies with IPO on the Brazilian stock exchange

Barros

Santos

Orso

et al. 2021

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Purpose From the agency theory’s point of view, this paper aims to analyze corporate governance mechanisms about the characteristics of the companies quoted in the segments Bovespa Mais and Bovespa Mais 2 and their influence on the creation of value in preparation for the opening of the initial public offering (IPO). Design/methodology/approach A quantitative approach was adopted to achieve the proposed objective using the panel data with fixed effects and secondary data collected on the Comissão de Valores Mobiliários website, using statistical software Stata® 13.0 for statistical tests. The population comprises non-financial companies belonging to the Bovespa Mais and Bovespa Mais Level 2 groups, as the survey sample took into account the period of adhesion of the companies, totaled in 15 companies, which cover the period from 2008 to 2019. The selected variables correspond to the ownership structure’s characteristics, then the board’s composition and the fiscal council as the body responsible for supervising the administrators’ acts. Findings The main results indicate that the number of independent members on the board of directors and the supervisory board’s participation positively influence market performance. However, it also reveals that the concentration of ownership brings fundraising for other companies’ acquisitions, risk reduction concerning information asymmetry between investing powers. Research limitations/implications The main results indicate that the number of independent members on the board of directors and the supervisory board’s participation positively influence market performance. Despite this, it also reveals that the concentration of ownership brings fundraising for other companies’ acquisitions, risk reduction concerning information asymmetry between investing powers. Practical implications This paper advances a comparative institutional perspective to explain capital market choice by firms making an IPO in a foreign market. This paper finds that internal governance characteristics (founder-chief executive officer, executive incentives and board independence) and external network characteristics (prestigious underwriters, degree of venture capitalist syndication and board interlocks) are significant predictors of foreign capital market choice by foreign IPO firms. Social implications While product market choices have been central to strategy formulation for firms in the past, financial markets’ integration makes capital markets an equally crucial strategic decision. This paper advances a comparative institutional perspective to explain capital market choice by firms making an IPO in a foreign market. Originality/value This situation generates value to shareholders and is perceived by the market and, ultimately, generates a direct relationship with the market performance of companies. While product market choices have been central to strategy formulation for firms in the past, financial markets’ integration makes capital markets an equally major strategic decision.

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Are pension funds good monitors?

Cited by 8 publications

References 53 publications

Principal-principal conflicts leading to activism of a large government-owned investor in Brazil

Principal-principal conflicts leading to activism of a large government-owned investor in Brazil

Does ownership moderate the effects of size on pension funds’ efficiency and investment performance?

The evolution of corporate governance and agency control: the effectiveness of mechanisms in creating value for companies with IPO on the Brazilian stock exchange

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