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Pension Reform, Ownership Structure, and Corporate Governance: Evidence from Sweden

Mariassunta Giannetti and Luc Laeven ()

No 6489, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Sweden offers a unique natural experiment to analyze the microeconomic effects of institutionalized saving on ownership structure, corporate governance and performance of listed companies. First, the Swedish pension reform increased the participation of pension funds in the domestic stock market and caused a significant reshuffling in the ownership of the existing pension funds. Second, the availability of detailed data on firm ownership allows us to document the effects of the pension reform. We show that the effects of institutional investment on firm performance depend on the industry structure of pension funds. In particular, we find that firm performance improves if large independent private pension funds and public pension funds increase their equity stakes in the firm, but not if smaller pension funds and pension funds related to financial institutions and industrial groups increase their shareholdings. Additionally, controlling shareholders appear reluctant to relinquish control and the control premium increases if public pension funds acquire shares.

Keywords: Control premium; Controlling shareholders; Dual class shares; Pension funds (search for similar items in EconPapers)
JEL-codes: G23 G3 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cfn and nep-eec
Date: 2007-09
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