Pension Privatization and Corporate Governance: The Chilean System in Comparative Perspective

22 Pages Posted: 1 Apr 2008

See all articles by Jacob Allen

Jacob Allen

International Relations and Pacific Studies

Peter Gourevitch

Graduate School of International Relations and Pacific Studies ; University of California, San Diego (UCSD)

Date Written: March 31, 2008

Abstract

Pension system privatization and corporate governance reform have simultaneously come to the forefront of efforts to diffuse ownership concentration and therefore pursue capital market development. Typically considered separately, the two are closely linked. We explore the ways in which many Latin American economies have failed to realize the expectation that deeper markets imply diffuse, well-governed corporate ownership. As an explanation, we demonstrate that the institutional investors created by pension privatization, and the individual pensioners they represent, are highly constrained in their ability to exercise voice or exit for better opportunities in an effort to encourage improved corporate governance and ownership diffusion. Furthermore, such activism is a low priority given the relatively small fraction the corporate equities comprise of funds' overall portfolios. Chile's experience is compared with the institutional details of pension systems in four other Latin American countries. A preliminary theory and hypotheses are generated inductively based on the analysis.

Keywords: corporate governance, pension reforms, capital markets, chile, latin america

Suggested Citation

Allen, Jacob and Gourevitch, Peter A. and Gourevitch, Peter A., Pension Privatization and Corporate Governance: The Chilean System in Comparative Perspective (March 31, 2008). Available at SSRN: https://ssrn.com/abstract=1114954 or http://dx.doi.org/10.2139/ssrn.1114954

Jacob Allen

International Relations and Pacific Studies ( email )

9500 Gilman Drive
La Jolla, CA 92093-0519
United States

Peter A. Gourevitch (Contact Author)

University of California, San Diego (UCSD) ( email )

9500 Gilman Drive0519
Robinson Building
La Jolla, CA 0519
United States
858 534 7085 (Phone)
858 5343939 (Fax)

Graduate School of International Relations and Pacific Studies ( email )

9500 Gilman Drive0519
Robinson Building
La Jolla, CA 0519
United States
858 534 7085 (Phone)
858 5343939 (Fax)

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