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Disengagement and Investment Short-Termism: A Contextual Study of UK Pension Funds

Lookup NU author(s): Dr Anna Tilba, Professor John Wilson

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Abstract

The paper examines the contextual factors that shape pension fund behaviour vis-à-vis investee corporations. The analysis is based on thirty-five in-depth, semi-structured interviews and round table discussions with pension fund trustees, executives, investment officers and financial intermediaries. We develop a framework of related contextual drivers that shape pension fund investment and ownership behaviour, detailing how two primary drivers act as the core influences, alongside four secondary drivers associated with the broad socio-economic context. We show how changes in the context of pension funds (e.g. recession, unstable markets, deficits) and pension fund ownership (i.e. complexity) are contributing to short-term behaviours by pension fund managers, which is inconsistent with the long-term orientation of pension fund owners. Our findings challenge the perspective that institutional investors behave as principals. Finally, the paper has significant policy implications that advocate managerial accountability, offering a more realistic assessment of institutional investors’ willingness and ability to act as ‘engaged owners’.


Publication metadata

Author(s): Tilba A, Wilson JF

Editor(s): Goergen, M

Publication type: Conference Proceedings (inc. Abstract)

Publication status: Unpublished

Conference Name: Corporate Governance, Shareholder Types and Ownership Forms Conference

Year of Conference: 2014


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