Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/171506
Authors: 
von Arx, Urs
Schäfer, Andreas
Year of Publication: 
2007
Series/Report no.: 
Economics Working Paper Series 07/63
Abstract: 
Although pension funds have gained importance in the last two decades, their role has not been described in detail by economic models. This paper focusses on the scope of these institutional investors when they are not satisfied with a management team of a company in which the pension fund holds a block of shares. Stock holdings by pension funds are largely dispersed. Therefore, any intervention by pension funds in corporate governance requires the formation of a coalition of pension funds. The realization of a coordinated intervention, in turn, is subject to the problems related to the provision of public goods, such as free-riding. We find that stock dispersion among pension funds, the amount of noise traders, coordination costs and the attractiveness of the exit option are relevant factors for successful interventions. The overall probability for a successful intervention, however, is quite low.
Subjects: 
Pension Funds
Public Goods
Coase Theorem
JEL: 
G23
H41
Q50
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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