Del Guercio-Hawkins (1999) : Public Pension Fund Activism n Consider proposals submitted by the largest and most activist pension funds during : CREF, CALPERS, CALSTRS, SWIB, NYC. n Table 1 n Board issues becoming more common in the 1990s. n Antitakeover issues becoming less common. n Voting issues remain popular.

Del Guercio-Hawkins (1999) : Public Pension Fund Activism n Table 2 n Total domestic equity portfolio value n CREF: $31.8 billion n CALPERS: $19 billion n Average dollar holding in target firms n CREF: $67 million n CALPERS: $34 million n Total dollar holding in target firms n CREF: $2.1 billion n CALPERS: $1.1 billion n Average % ownership in target firms n CREF: 1% n CALPERS: 1%

Del Guercio-Hawkins (1999) : Public Pension Fund Activism n Table 4: Frequency of announced events in the target firm in the four years after the firm is targeted. n Does pension fund activism have a significant impact on target company business policies, organization, and governance? n Management and board turnover is significantly higher for targeted firms. n Shareholder lawsuits and public “no” votes for directors are significantly higher for targeted firms. n Asset sales/spin-offs/restructuring/layoffs are significantly higher for targeted firms. n Table 6: Do pension funds choose targets that are (even without being targeted) likely to engage in above policy/organizational changes? No.

Del Guercio-Hawkins (1999) : Public Pension Fund Activism n Impact of pension fund activism on long-term performance n Pages : No long-term improvement in performance. n Implication of above n Pension fund activism has no long-term improvement in performance. n Measurement techniques are not powerful enough to pick up “small” improvements in performance.

Measurement techniques are not powerful enough to pick up “small” improvements in performance. Barber and Lyon (Journal of Financial Economics, July 1996) Accounting operating performance: Return on assets (ROA) after controlling for industry performance: Superior ROA performance of 1% : Detected 2 times out of 10. Superior ROA performance of 2% : Detected 7 times out of 10. Superior ROA performance of 3% : Detected almost every time.

Measurement techniques are not powerful enough to pick up “small” improvements in performance. Kothari and Warner (Journal of Finance, 2001) Using state-of-the-art techniques, can we detect superior mutual fund performance? 100 basis points annual superior performance: Undetected. 500 basis points: Detected once every three times basis points: Detected (almost) every time. Ability to detect superior performance improves if one tracks a mutual fund’s stock trades.