The Systemic Governance Influence of Universal Owners: Evidence from an Expectation Document

81 Pages Posted: 30 Jun 2019 Last revised: 19 Jun 2020

See all articles by Ruth V. Aguilera

Ruth V. Aguilera

Northeastern University - Department of International Business and Strategy

Vicente J. Bermejo

ESADE Business School

Javier Capapé

IE University

Vicente Cuñat

London School of Economics & Political Science (LSE) - Financial Markets Group

Date Written: June 12, 2020

Abstract

Universal owners can systemically diffuse their investment preferences to a large share of the market. We use the unexpected release of a corporate governance expectation document by Norway’s sovereign wealth fund as a natural experiment to understand how active universal investors can influence firms. We introduce a new decomposition to explore the effectiveness of this distinct activism tool. We show how firms adapted to the fund’s new portfolio-wide governance expectations and explore their heterogeneous response across ownership levels and firm characteristics. We also show how the fund changed it’s investment policy to meet it’s new stated preferences.

Keywords: Corporate Governance; Institutional Ownership; Expectation Document

JEL Classification: F30, G32, G34

Suggested Citation

Aguilera, Ruth V. and Bermejo, Vicente J. and Capapé Aguilar, Javier and Cuñat, Vicente, The Systemic Governance Influence of Universal Owners: Evidence from an Expectation Document (June 12, 2020). European Corporate Governance Institute - Finance Working Paper No. 625/2019, Northeastern U. D’Amore-McKim School of Business Research Paper No. 3411566, ESADE Business School Research Paper, Available at SSRN: https://ssrn.com/abstract=3411566 or http://dx.doi.org/10.2139/ssrn.3411566

Ruth V. Aguilera

Northeastern University - Department of International Business and Strategy ( email )

Boston, MA 02115
United States

Vicente J. Bermejo

ESADE Business School ( email )

Av. de Pedralbes, 60-62
Barcelona, 08034
Spain

Javier Capapé Aguilar

IE University ( email )

Calle Maria de Molina 6
Madrid, Madrid 28006
Spain

Vicente Cuñat (Contact Author)

London School of Economics & Political Science (LSE) - Financial Markets Group ( email )

Houghton Street
London WC2A 2AE
United Kingdom

HOME PAGE: http://www.vicentecunat.com

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