Pension Reform, Ownership Structure, and Corporate Governance: Evidence from a Natural Experiment

Giannetti, Mariassunta; Laeven, Luc

doi:hhn091

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Pension Reform, Ownership Structure, and Corporate Governance: Evidence from a Natural Experiment

The Review of Financial Studies, Vol. 22, Issue 10, pp. 4091-4127, 2009

Posted: 28 Sep 2009

See all articles by Mariassunta Giannetti

Mariassunta Giannetti

Stockholm School of Economics; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); Swedish House of Finance

Luc Laeven

European Central Bank (ECB); Centre for Economic Policy Research (CEPR)

There are 3 versions of this paper

Date Written: October 2009

Abstract

Sweden offers a unique natural experiment to analyze the effects of institutionalized saving on the ownership structure, corporate governance, and firm performance. The Swedish pension reform increased the stock market participation of pension funds, causing a significant reshuffling in the ownership of pension funds. We show that the effects of institutional investment on firm performance depend on the industry structure of pension funds. Firm valuation improves if public pension funds and large independent private pension funds increase their shareholdings. Additionally, controlling shareholders appear reluctant to relinquish control and the control premium increases if public pension funds acquire shares.

Keywords: G3, G23

Suggested Citation: Suggested Citation

Giannetti, Mariassunta and Laeven, Luc A., Pension Reform, Ownership Structure, and Corporate Governance: Evidence from a Natural Experiment (October 2009). The Review of Financial Studies, Vol. 22, Issue 10, pp. 4091-4127, 2009, Available at SSRN: https://ssrn.com/abstract=1478808 or http://dx.doi.org/hhn091