The motivation and impact of pension fund activism

Pension funds have pursued an active role in corporate governance, although some question their effectiveness and motivations. We examine the impact a nd motivation of pension fund activism by studying the shareholder proposal s of the largest, most active funds from 1987 through 1993. We find signifi cant heterogeneity across funds in activism objectives, tactics, and impact on target firms, consistent with differing investment strategies. We find the funds are more successful at monitoring and promoting change in target firms than previously recognized. We also find no evidence to support motiv ations other than fund value maximization. (C) 1999 Elsevier Science S.A. A ll rights reserved.