Does Long-term Patient Capital Matter? The Impact of Pension Fund Investments on Firm Productivity

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Abstract

The digital and green transitions require long-horizon investments on an unprecedented scale. Pension funds, with their long-term liabilities, are natural providers of such investments. In this paper, we construct a comprehensive dataset that integrates firm ownership information with Danish registers, enabling us to empirically document a significant relationship between pension fund investment and firm productivity. Following such an investment, we observe a substantial increase in firm productivity, averaging between 3% and 5%. This finding is robust and persists across various methodological approaches, including accounting for selection issues and a broad array of refinements, such as controlling for the types of co-investors. Our results suggest that public policies aimed at stimulating pension funding and encouraging pension fund equity holdings could enhance the productivity of the economy.
Original languageEnglish
Publication dateMay 2024
Number of pages74
Publication statusPublished - May 2024
EventPension Finance: Investment, Regulation, and Risk-Sharing - Copenhagen Business School, Frederiksberg, Denmark
Duration: 11 Jun 202411 Jun 2024
https://www.nber.org/conferences/pension-finance-investment-regulation-and-risk-sharing-spring-2024

Conference

ConferencePension Finance: Investment, Regulation, and Risk-Sharing
LocationCopenhagen Business School
Country/TerritoryDenmark
CityFrederiksberg
Period11/06/202411/06/2024
Internet address

Keywords

  • Pension funds
  • Long-termism
  • Firm productivity
  • Equity

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