We survey institutional investors to better understand their role in the corporate governance of firms. Consistent with a number of theories, we document widespread behind‐the‐scenes intervention as well as governance‐motivated exit. These governance mechanisms are viewed as complementary devices, with intervention typically occurring prior to a potential exit. We further find that long‐term investors and investors that are less concerned about stock liquidity intervene more intensively. Finally, we find that most investors use proxy advisors and believe that the information provided by such advisors improves their own voting decisions.

Even though stock returns are not highly autocorrelated, there is a spurious regression bias in predictive regressions for stock returns related to the classic studies of Yule (1926) and Granger and Newbold (1974) . Data mining for predictor variables interacts with spurious regression bias. The two effects reinforce each other, because more highly persistent series are more likely to be found significant in the search for predictor variables. Our simulations suggest that many of the regressions in the literature, based on individual predictor variables, may be spurious.

We report evidence on chief executive officer (CEO) turnover during the 1971 to 1994 period. We find that the nature of CEO turnover activity has changed over time. The frequencies of forced CEO turnover and outside succession both increased. However, the relation between the likelihood of forced CEO turnover and firm performance did not change significantly from the beginning to the end of the period we examine, despite substantial changes in internal governance mechanisms. The evidence also indicates that changes in the intensity of the takeover market are not associated with changes in the sensitivity of CEO turnover to firm performance.

Issuers of initial public offerings (IPOs) can report earnings in excess of cash flows by taking positive accruals. This paper provides evidence that issuers with unusually high accruals in the IPO year experience poor stock return performance in the three years thereafter. IPO issuers in the most “aggressive” quartile of earnings managers have a three‐year aftermarket stock return of approximately 20 percent less than IPO issuers in the most “conservative” quartile. They also issue about 20 percent fewer seasoned equity offerings. These differences are statistically and economically significant in a variety of specifications.

This paper presents an empirical investigation of the security selection and market timing performance of a random sample of 71 U.S. equity pension fund managers using monthly returns for the period 1983-1990.The 71 equity fund managers include banks, insurance companies and investment advisors who have been allocated funds by pension plan sponsors.The data were provided by the Frank Russell Company of Tacoma, WA.While there have been many studies of U.S. equity mutual funds, ours is the first such study of which we are aware of U.S. equity pension fund managers.The estimates of selectivity and timing were derived using the Treynor and Mazuy (1966) model and the Bhattacharya and Pfleiderer (1983) model.The total sample of managers is subdivided into four groups by investment style, and a benchmark portfolio is identified for each style.We also included two benchmarks for the broad equity market.Regardless of the choice of a benchmark portfolio or estimation model, the selectivity measure is positive on average and the timing measure is negative on average.However, both selectivity and timing do appear to be somewhat more sensitive to the choice of a benchmark portfolio (and, possibly, the time period) when managers are classified by investment style.A metaanalysis was performed to quantify the effect of sampling error on the cumulated regression results.In every case, meta-analysis revealed some real variation (in excess of that attributable to sampling error) around the mean values for both selectivity and timing.An examination of the 80% probability intervals for selectivity revealed that the best managers can deliver substantial risk-adjusted excess returns.Finally, consistent with previous studies of equity mutual fund performance, we also found a negative correlation between selectivity and timing.However, we argue that the observed negative correlation in our data is largely an artifact of negatively correlated sampling errors for the two estimates.The Investment Performance of U.S. Equit>' Pension Fund Managers: An Empirical InvestigationEach year Pensions & Investments , a leading trade newspaper for the pension management industry, profiles the top 1000 pubUc and private U.S. pension funds.At year-«Kl 1990, these funds had total pension assets of $1,876 trillion.Approximately $750 billion (40 percent) was invested in equities.The Investment Company Institute estimates that $250 billion was invested in open-and closed-end equity-oriented U.S. mutual funds at year-end 1990.This snapshot indicates a 3:1 ratio for p«ision fund equity investment versus mutual fund equity investment.Not only is the dollar difference large, but also the difference in the number of managers in each universe is large.The total number of pension fund managers is much larger than the number of mutual fund managers, by a ratio of approximately 10:1.Yet surprisingly little research has been done on the investment performance of U.S. equity pension fund managers.This paper begins to fill an important gap in the literature by providing empirical evidence on the investment performance of these managers.The focus of this study is on equity pension fund managers who have been allocated funds by a pension plan sponsor.Brinson, Hood and Beebower (1986), Ippolito and Turner (1987), and Berkov-tiz, Finney and Logue (1988) examined the investment performance of a sample of large U.S. pension plans.Each plan may be composed of many fund managen in different asset categories with their own specific investment objectives and styles.In a recent study containing a wealth of informatioQ about the pension management industry, Lakonishok, Shleifer and Vishny (1992) examined the annual returns of a sample of equity pension funds over

This paper presents an empirical examination of the selectivity and market timing performance of a sample of U.S. equity pension fund managers. Regardless of the choice of benchmark portfolio or estimation model, the average selectivity measure is positive and the average timing measure is negative. However both selectivity and timing appear to be somewhat sensitive to the choice of a benchmark when managers are classified by investment style. Meta‐analysis revealed some real variation around the mean values for each measure. The 80 percent probability intervals for selectivity revealed that the best managers produced substantial risk‐adjusted excess returns. We also found a negative correlation between selectivity and timing, but we argue that the observed negative correlation in our data is largely an artifact of negatively correlated sampling errors for the two estimates.

We describe how capital accumulation and the network structure of US production interact to amplify the effects of sectoral trend growth rates in total factor productivity and labor on trend GDP (gross domestic product) growth. We derive expressions that conveniently summarize this long-run amplification effect by way of sectoral multipliers. We estimate that sector-specific factors have historically accounted for approximately three-fourths of long-run changes in GDP growth. Trend GDP growth fell by nearly 3 percentage points over the postwar period, with especially significant contributions from the Construction sector in 1950–80 and the Durable Goods sector in 2000–2018. No sector has contributed any steady significant increase to the trend growth rate of GDP in the past 70 years.

Earnings nonresponse in household surveys is widespread, yet there is limited knowledge of how nonresponse biases earnings measures. We examine the consequences of nonresponse on earnings gaps and inequality using Current Population Survey individual records linked to administrative earnings data. The common assumption that earnings are missing at random is rejected. Nonresponse across the earnings distribution is U-shaped, highest in the left and right tails. Inequality measures differ between household and administrative data due in part to nonresponse. Nonresponse biases earnings differentials by race, gender, and education, particularly in the tails. Flexible copula-based models can account for nonrandom nonresponse.