Study On Pension Fund Activism On The Basis Of American Experience

With the faster step into the capital market, our country's pension fund will face a lot more serious invest risks. The rigid requirement on the safety of the pension fund's capital makes it more necessary to participate in the listed companies' governance by the pension fund, which is in line with the present trend of development of the aboard pension fund and corporation governance practice. The paper introduces completely how American pension funds have intervened in the corporation governance in recent two decades . The history of American pension fund activism, which started in 1980s, illustrates that it has been the important characteristic of modern financial markets and the pension funds have been the active participators of corporate governance as well. These fields in which pension funds intervene generally include the external governance and internal governance and the corporation responsibility to society. Owing to the short history of these practices, effects of pension fund activism on the corporation performance are still a little mixed and need to be further researched with the development of the practices. However pension funds' behaviors bring about a series of conspicuous and positive changes on the corporation governance structures. Moreover, the shareholder right campaign lead by the pension fund plays a certain role in controlling the agent problems . In the practice of how to participate in the corporation governance, pension fund have to find out thecritical points of supervisory cost in amount and of supervised companies in number which define the optimal decision. Meanwhile, pension funds, according to managers' various attitudes toward intervening in corporation governance by shareholders, will employ different ways of supervision which include the quiet negotiation , the submitted proposals , proxy solicitation voting contests or takeover mechanism .owing to the informational incompleteness restriction and especially the negative effect of corporation control, the benefits that pension funds regain as shareholders are decided by corporation managers at substantial degree. For the sake of protecting their own interest, pension funds have to attach much attention on corporation control issues. To solve efficiently these issues, pension funds must adopt the takeover mechanism in combining with the proxy solicitation voting mechanism. The paper thinks American experiences would enlighten our Chinese pension funds in participating in listed companies' corporation governance in the future and lastly put forward some related policy suggestion.