Chilean Pension Fund Managers and Corporate Governance: The Impact on Corporate Debt

North American Journal of Economics and Finance 48, 321-337

45 Pages Posted: 26 Nov 2019

See all articles by Mauricio Jara

Mauricio Jara

Universidad Católica de la Santísima Concepción

Félix J. López-Iturriaga

Universidad de Valladolid - Department of Finance and Accounting; National Research University Higher School of Economics - International Laboratory of Intangible-driven Economy

Pablo SanMartín

University of Valladolid

Paolo Saona

Saint Louis University - Madrid Campus

Giannina Tenderini

University of Chile

Date Written: November 14, 2019

Abstract

In this paper we analyze the relationship between the investment of Pension Funds Managers (AFPs) and the cost of corporate debt (public and private). Using a sample of 93 non-financial Chilean listed firms between 2009 and 2014, we find that AFP’s increases the probability to issue bonds. Moreover, according to our crowding-out hypothesis, we show that AFPs increases the cost of bank borrowing. In line with the monitoring view, we find that AFPs decrease bond yields. On average, our results suggest that AFP’s improve corporate governance by influencing the information disclosure and reducing the intensity of lending relationships with banks.

Keywords: Pension Fund Managers (AFP); cost of debt; corporate finance; institutional investors; corporate governance; Chile

JEL Classification: G32

Suggested Citation

Jara, Mauricio and Lopez-Iturriaga, Felix Javier and SanMartín, Pablo and Saona, Paolo and Tenderini, Giannina, Chilean Pension Fund Managers and Corporate Governance: The Impact on Corporate Debt (November 14, 2019). North American Journal of Economics and Finance 48, 321-337. Available at SSRN: https://ssrn.com/abstract=3486794

Mauricio Jara (Contact Author)

Universidad Católica de la Santísima Concepción ( email )

Caupolicán 491
Concepción, 4070129
Chile

Felix Javier Lopez-Iturriaga

Universidad de Valladolid - Department of Finance and Accounting ( email )

Avda. Valle Esgueva 6
47011 Valladolid
Spain
+34 983 184 395 (Phone)
+34 983 183830 (Fax)

National Research University Higher School of Economics - International Laboratory of Intangible-driven Economy ( email )

Lebedeva,27
Perm, Perm 614070
Russia

Pablo SanMartín

University of Valladolid ( email )

8 C/Plaza de Santa Cruz
Valladolid, Valladolid 47002
Spain

Paolo Saona

Saint Louis University - Madrid Campus ( email )

Avidena del Valle, 34 y 28
Madrid, 28003
Spain
0034 915 545858 (Phone)
0034 915 546202 (Fax)

Giannina Tenderini

University of Chile

Pío Nono Nº1, Providencia
Santiago, R. Metropolitana 7520421
Chile

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