The role of Institutional investors in alleviating the agent problem of management and its valuation effect has been studied extensively in corporate finance. We complement this stream of research by exploring management's control over institutional investors with misaligned objectives, particularly public pension fund, and the consequential valuation effect. We investigate the politic motive of public pension fund's shareholder activism and its impact on the target firms' operational performance, address the control of a strong management on public pension funds' self-serving agenda, and finally we compare the ownership adjustment pattern of public pension funds to other institutional investors to conclude public pension funds' ownership adjustment reflects their private pursuit. The first chapter explores the politic facet and performance effect of shareholder activism sponsored by public pension fund. In this study, we show that having a public pension fund as the leading sponsor of a shareholder proposal significantly improves the proposal's likelihood of being accepted by the target firm. The increased acceptance rate sources from the subset of proposals addressing a social responsibility issue, and targeting firms with weak insider control. An investigation of the public pension board reveals that the board's political profile is the primary determinant of public pension fund's propensity to lead a proposal, and the target firm's acceptance rate. We also assess the performance impact of shareholder proposals. For target firms with strong insider control, the performance impact of accepted social responsibility proposals is significantly positive; that of governance proposals is negligible. For target firms with weak insider control, the performance impact associated with public pension funds is either negative or negligible. These results suggest that the motive driving public pension funds' dominant presence in shareholder activism is not market based, but laden with purpose other than value creation. In the second chapter, we postulate that the widely documented negative valuation effect of ownership by public pension will be weak on firms with extra managerial control mechanism and/or whose managerial ownership of cash flow is high. For firms with high level managerial ownership of cash flow, management bears higher cost for a concession made with public pension fund's misaligned objective. An efficient market will expect this effect and value the managerial control over public pension fund to the extent that the management's benefit is aligned with outside shareholders. Consequently, the cross section valuation difference of firms held by public pension funds can be explained by the managerial ownership of cash flow, managerial control derived from extra mechanism such as dual class share, however, has no explanative power. The last chapter investigates the link between private benefits and institutional holding change. We assume the cross section equilibrium of block holding will break when market sentiment is high. Consequently, block holder tends to shed more shares loaded with less private benefits by taking advantage of opportunities available in a high sentiment market. The empirical results support this conjecture. When the market sentiment is high, Institutional block holders tend to shed more private benefits meager dual-class share than private benefits affluent non-dual class share. This pattern does not exist when the market sentiment is low. Most importantly, public pension fund is identified as the major driver of this effect. / Business Administration

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<p>This dissertation is a collection of three papers, each one being a chapter. In the first chapter, I examine how career interruptions related to child-raising duties affect married women’s labor market trajectory, lifetime earnings, and Social Security retirement benefits. To address this question, I develop and estimate a dynamic life-cycle model of female labor supply, savings, and Social Security benefit claiming. I explicitly model the Social Security benefits system and the federal and payroll tax structure in the United States. The framework, thus, allows me to unravel the complex interdependencies between women’s participation decisions, accumulated work experience, lifetime earnings, and public pension benefits. I estimate the model using the Method of Simulated Moments and match data for the cohort born in 1943-1954. I use the model to simulate labor supply behavior of married women in a revenue-neutral counterfactual scenario where I introduce Social Security caregiver credit that covers the lost earnings during the first 5 child-rearing years through changes in retirement benefits. I find that the model predicts that introducing the provision of earning credits for child care in the Social Security system would reduce participation of married women during the child-rearing years, but the contributory nature of the caregiver credits creates incentive to work in the post-childrearing period.</p> <p><br></p> <p>In the second chapter, I evaluate the implication of introducing Social Security caregiver credit by examining whether and to what extent implementing this child-related policy to the existing Social Security system would help reduce the motherhood earnings penalty over the life cycle. I utilize the dynamic lifecycle model developed in Chapter 1 and conduct revenue-neutral counterfactual policy experiments by introducing caregiver credits in in various settings. First, I analyze the effect of the policy at different generosity levels; and second, I implement the policy in the presence as well as in the absence of the marriage-based noncontributory Social Security benefits (spousal and survivors benefits). Third, I conduct an alternative counterfactual policy experiment where mothers could drop five additional work years from the average career earnings (or equivalently Social Security benefits) calculation. The model predicts that lifetime pre-tax labor earnings of married women increase significantly under when the caregiver credits are introduced in a setting where spousal and survivors benefits are eliminated, and there is a sizeable reduction in gender gap in average career earnings at the Social Security Early Retirement Age. The alternative policy of computing average career earnings based on a mother's 30 years of earnings has significantly smaller impact on offsetting motherhood earnings penalty through retirement benefits compared to the provision of Social Security caregiver credits.</p> <p><br></p> <p>In the third chapter, I examine the effect of Supplemental Nutrition Assistance Program (SNAP) work requirement reinstatement on food insecurity outcomes of able-bodied adults without dependents (ABAWDs). The policy restricts SNAP benefits of ABAWDs to 3 months in a 36 month period if they are not working or participating in any work program for at least 20 hours a week. In the aftermath of the 2008 recession, the American Recovery and Reinvestment Act of 2009 waived work requirements nationwide, and many states reimplemented the work rule at different times beginning in 2011. I employ a difference-in-differences approach utilizing this cross-state variation in the reimplementation of the policy. Using rich information on food affordability and food intake behavior from the Food Security Supplement of the Current Population Survey (CPS-FSS), I find that promoting work for food assistance improved the overall food security status of ABAWDs by reducing disruptions in food intake, anxiety over food affordability and dependency on emergency food receipt. Subsample analyses indicate that effects are stronger for never married and less educated ABAWDs.</p>