Wharton Pension Research Council Working Papers

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Working Paper

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Many public pension funds engage in activism by using their pooled ownership of stock to affect changes in the corporations they own. The merits of activism depend on: (1) the conflicts of interest between corporate managers and shareholders, and (2) the conflicts of interest between portfolio managers and investors. These conflicts lead to two types of activism: shareholder activism and social activism. Portfolio managers can use their position to monitor conflicts that might arise between managers and shareholders (shareholder activism), but they can also abuse their position by pursuing actions that advance their own moral values or political interests at the expense of investors (social activism).


The published version of this Working Paper may be found in the 2009 publication: The Future of Public Employee Retirement Systems.

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© 2008 Pension Research Council of the Wharton School of the University of Pennsylvania. All rights reserved.


Barber is a Professor of Finance at the Graduate School of Management, UC Davis, and the Director of the Center for Investor Welfare and Corporate Responsibility at UC Davis. This chapter is an update of “Monitoring the Monitor: Evaluating CalPERS activism,” Journal of Investing, forthcoming. Amanda Kimball provided valuable research assistance. Ho Ho (CalPERS), Dan Kiefer (CalPERS), Craig Rhines (CalPERS), Ryoko Kita (UC Davis MBA student), and Paul Teng (Wilshire Associates) were very helpful gathering and understanding the data used in this study. David Blitzstein, Bill Gebhardt, Eugene Fama, Ken French, Michael Maher, Olivia Mitchell, Thomas Nyhan, Terrance Odean, Chris Solich, Dennis Trujillo, Robert Yetman, and Michelle Yetman provided valuable comments. All errors are my own. Opinions and errors are solely those of the author and not of the institutions with whom the author is affiliated.

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Date Posted: 09 August 2019