The systemic governance influence of expectation documents: evidence from a universal owner

Aguilera, Ruth V., J. Bermejo, Vicente, Capapé, Javier and Cuñat, Vicente ORCID: 0000-0001-7504-2801 (2024) The systemic governance influence of expectation documents: evidence from a universal owner. Review of Corporate Finance Studies. ISSN 2046-9128

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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.

Item Type:	Article
Official URL:	https://academic.oup.com/rcfs
Additional Information:	© 2024 The Author(s)
Divisions:	Finance
Subjects:	H Social Sciences > HG Finance
JEL classification:	F - International Economics > F3 - International Finance > F30 - General G - Financial Economics > G3 - Corporate Finance and Governance > G32 - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers; Acquisitions; Restructuring; Corporate Governance
Date Deposited:	11 Mar 2024 15:45
Last Modified:	15 Oct 2024 15:12
URI:	http://eprints.lse.ac.uk/id/eprint/122267

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