The “CalPERS effect” revisited again

Nelson, James M.

doi:10.1016/j.jcorpfin.2005.07.002

Cited by 57 publications

(44 citation statements)

References 18 publications

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“…Similarly Karpoff (2001, p. 1) reports 'most evidence indicates that shareholder activism can prompt small changes in target firms' governance structures, but has negligible impacts on share values and earnings'. This is consistent with the vanishing evidence of significant positive abnormal returns surrounding the announcement of performance targetings by CalPERS, dubbed the 'CalPERS effect' (Nelson, 2006).…”

Section: Firm Performance and Outside Blockholderssupporting

confidence: 80%

Corporate governance, accounting and finance: A review

Brown¹,

Beekes²,

Verhoeven³

2010

Accounting &Amp; Finance

487

410

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We review accounting and finance research on corporate governance (CG). In the course of our review, we focus on a particularly vexing issue, namely endogeneity in the relationships between CG and other matters of concern to accounting and finance scholars, and suggest ways to deal with it. Given the advent of large commercial CG databases, we also stress the importance of how CG is measured and in particular, the construction of CG indices, which should be sensitive to local institutional arrangements, and the need to capture both internal and external aspects of governance. The 'stickiness' of CG characteristics provides an additional challenge to CG scholars. Better theory is required, for example, to explain whether various CG practices substitute for each other or are complements. While a multidisciplinary approach to developing better theory is never without its difficulties, it could enrich the current body of knowledge in CG. Despite the vastness of the existing CG literature, these issues do suggest a number of avenues for future research.

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Section: Firm Performance and Outside Blockholderssupporting

confidence: 80%

Corporate governance, accounting and finance: A review

Brown¹,

Beekes²,

Verhoeven³

2010

Accounting &Amp; Finance

487

410

View full text Add to dashboard Cite

show abstract

“…8 Early studies examined links between 5 Recent evidence suggests that shareholder activists may not enhance firm value. Nelson (2006) shows that the announcement of targeting by one of the largest shareholder activist groups, the California Public Employees' Retirement System, is not associated with significant positive abnormal returns. 6 Bebchuk et al show that only 25% of the IRRC factors fully drive the relation between G-Index and firm valuation.…”

Section: Review Of Related Researchmentioning

confidence: 94%

Corporate governance and firm valuation

Brown

Caylor

2006

Journal of Accounting and Public Policy

886

176

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“…Public pension funds were the most prolific institutional proposal sponsors until the early 1990s, when they began focusing on behind-the-scenes negotiations with 9 management and targeting firms through the media (Carleton, Nelson, and Weisbach, 1998;English, Smythe, and McNeil, 2004;Wu, 2004;Nelson, 2006) 4 . Hedge funds and other investment funds have historically been better known to rely on controversial activist strategies, whereby they take large positions in underperforming firms and target management directly as per the agendas presented in their purpose statements (Brav, Jiang, Partnoy, and Thomas, 2008;Bradley, Brav, Goldstein, and Jiang, 2009;Greenwood and Schor, 2009;Klein and Zur, 2009) Though not reported in Table 2, the surge in the number of takeover-and compensationrelated proposal submissions was largely driven by union pension funds.…”

Section: Proposal Sponsorsmentioning

confidence: 99%

Shareholder Activism through the Proxy Process

Renneboog

Szilágyi

2009

SSRN Journal

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-This paper provides evidence on the corporate governance role of shareholderinitiated proxy proposals. Previous studies debate over whether activists use proxy proposals to discipline firms or to simply advance their self-serving agendas, and whether proxy proposals are effective at all in addressing governance concerns. Using the largest sample yet examined as well as extensive controls for governance quality, we find that activists use the proxy process as a disciplinary mechanism, and as such are valuable monitoring agents. Moreover, proposal announcements in the proxy statements have positive stock price effects, and both the market and the voting shareholders respond as much to the target firm's governance quality as to the proposal's objective and sponsoring shareholder. We address the endogeneity of target selection and proposal success using sample selection models. We conclude that shareholder proposals have nontrivial control benefits, countering arguments that they should be restricted by the SEC.

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The “CalPERS effect” revisited again

Cited by 57 publications

References 18 publications

Corporate governance, accounting and finance: A review

Corporate governance, accounting and finance: A review

Corporate governance and firm valuation

Shareholder Activism through the Proxy Process

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