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
Date Written: November 14, 2019
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: Suggested Citation