The Systemic Governance Influence of Expectation Documents: Evidence from a Universal Owner

Ruth V Aguilera, Vicente J Bermejo, Javier Capapé and Vicente Cuñat

The Review of Corporate Finance Studies, 2025, vol. 14, issue 2, 372-407

Abstract: We examine expectation documents’ effectiveness as an activism tool. We use the Norwegian sovereign wealth fund’s release of a corporate governance expectation document as a natural experiment. We introduce a novel, three-way analytical decomposition of the firms, the fund, and their joint response to this document. Firms’ governance practices adapt to the fund’s new portfolio-wide governance preferences, with heterogeneous responses across ownership and firm characteristics. The fund’s investment policies also change, even at the expense of financial returns. Overall, our research demonstrates the potential effectiveness of expectation documents as an emerging, low-cost activism tool for universal investors. (JEL F30, G32, G34)

Date: 2025
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