Public Pension Fund Activism and M&A Activity

Posted: 25 Jun 2003

See all articles by Lily Xiaoli Qiu

Lily Xiaoli Qiu

Brown University - Department of Economics

Date Written: May 2003

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

Qiu, Lily Xiaoli, Public Pension Fund Activism and M&A Activity (May 2003). Available at SSRN: https://ssrn.com/abstract=418363

Lily Xiaoli Qiu (Contact Author)

Brown University - Department of Economics ( email )

64 Waterman Street
Providence, RI 02912
United States

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