Shareholder Wealth Effects of CalPERS' Activism

In the past decade, institutional investors have become more active in monitoring man- agement and voting the shares they control. The California Public Employees' Retirement System (CaIPERS) was a leader in this wave of activism. This study investi- gates the long-term returns an investor with public information could earn by buying a portfolio offirms targeted by CaIPERS and whether the success of CaIPERS' activism depends on the aggressiveness of the targeting. The evidence supports the idea that vis- ible and aggressive activism leads to substantial increases in shareholder wealth while a quieter activism does not.