PENSION REFORM AND CORPORATE GOVERNANCE: IMPACT IN CHILE

Augusto Iglesias-Palau
Additional contact information
Augusto Iglesias-Palau: PrimAmérica Consultores, Chile

Abante, 2000, vol. 3, issue 1, pages 109- 141

Abstract: The influence of Chilean pension fund management organizations (AFPs) on corporate governance has been shaped by regulations and by three characteristics of the local market, namely: lack of liquidity; high ownership concentration; and high visibility of AFP investment decisions. AFPs began to invest in stocks in 1985, and have behaved since as active shareholders. Pension fund participation in the stock market has had positive effects on corporate governance: 1) The number of independent board members has increased. 2) Monitoring costs have decreased as a result of improved public information quality. 3) Companies where pension funds have invested are under close public scrutiny. 4) Shareholder meetings are becoming more relevant. 5) Bondholder protection has also improved. Capital market growth has also had positive consequences on corporate governance. Economies of scale have made possible a new research industry, which has helped to reduce information costs. Also, market financing has become more attractive for firms. Capital market regulation has also improved and risk-rating procedures and conflict of interests regulations have been introduced in the legislation. All these changes have widened the investor base. However, other regulations and some ambiguities in the legislation impede pension funds to better monitor corporations, other than participating in shareholder meetings.

Keywords: Pension Reform; Corporate Governance; Chile; Emerging Markets; Regulations (search for similar items in EconPapers)
JEL-codes: G23 G30 K22 (search for similar items in EconPapers)
Date: 2000
View list of references View citations in EconPapers

Downloads: (external link)
http://www.abante.cl/files/ABT/Contenidos/Vol-3-N1/5%20Iglesias.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:pch:abante:v:3:y:2000:i:1:p:109-141

Ordering information: This journal article can be ordered from

Access Statistics for this article

Abante is edited by Eduardo Walker

More articles in Abante from Escuela de Administracion. Pontificia Universidad Católica de Chile.
Contact information at EDIRC.
Series data maintained by Verónica Gil ().