Enron, WorldCom, Adelphia, Tyco.

These are all words that bring corporate malfeasance to mind, words that have investors screaming out for reform in the markets.

What the largest business scandals have left in their wake is investors of all scales paying closer attention to how companies maintain their share prices and whether chief executives are pulling in more dough than they are worth.

These days the crusade for corporate governance almost always begins in California.

At the forefront of the call for corporate accountability is the California Public Employees Retirement System.

CalPERS, often thought of on Wall Street as the conscience of corporate boards, is the nation's largest public pension fund, with more than roughly $164 billion in assets. The system manages pension benefits for more than 1.4 million state employees.

Sean Harrigan, president of CalPERS' board, has said that good corporate governance leads to improved long-term performance of a company and that CalPERS cannot just be a passive holder of stock but an active share owner that takes its responsibilities seriously.

"The public pension funds have been more willing to take a public stance," said Charles Elson, Director of the Center for Corporate Governance at the University of Delaware. "Board independence, board composition and executive pay are big issues right now and I think recent moves by CalPERS have illustrated an overall frustration with companies as well as a concern over responsiveness to shareholder interests."

Jim Hawley, a professor of business and co-director of the Center for the study of Fiduciary Capitalism at St. Mary's College in Moraga, said the rise of shareholder activism by groups such as CalPERS can be attributed to the fact that institutional shareholders have eclipsed individual investors to become the largest stakeholders in American companies.

Hawley says a new phase in the history of the American economy is taking shape, where large institutional groups are becoming advocates for change in corporate America.

He pointed out that dropping the ball on the Enrons of the world -- not seeing those scandals coming -- may have caused CalPERS to step up and look at firms with a more critical eye, behind a larger magnifying glass.

"It's all about getting the herd to run," said Hawley. "The notion is that you want to set a standard for companies to go by. If as a fund you make an example of one company, other firms will become fearful and get in line."

And anytime CalPERS goes public with a gripe, the investing world tends to listen.

One of the many public activities that CalPERS found itself in was trying to incite a management shake-up at The Walt Disney Co. The fund is embroiled in a proxy fight to oust Disney chief executive Michael Eisner and believes he should step down by year's end.

On March 22, CalPERS demanded a meeting with Disney's board to discuss the future of the company.

Emerging as a major proponent of shareholder rights and other related activism, CalPERS also took on Pleasanton-based Safeway Inc. during the grocery strike, urging it to settle. The fight didn't end with the strike as CalPERS will withhold votes for three board members at the Safeway annual meeting on May 20.

Along with several other pension plans, CalPERS blames chairman and chief executive Steven Burd for mishaps that led to the stock plummeting in value by about $20 billion. Shares of Safeway have declined by 63 percent over the past five years.

Further still, CalPERS -- which played a big role in the removal of Richard Grasso as New York Stock Exchange chairman during the big to-do about his $188 million compensation package -- filed a lawsuit in December on behalf of investors saying that the exchange didn't do enough to circumvent fraudulent trading practices.

Hoping to wield its power even more on Wall Street, the fund on March 25 nominated former SEC Chairman Arthur Levitt and corporate governance expert Ralph Whitworth to the exchange's board of directors.

The system has also advocated changes in securities regulation as it recently urged the Securities and Exchange Commission to consider revisions and enhancements for a proposed rule that gives shareholders more say in who sits on corporate boards.

CalPERS suggested changes in the proposal, including allowing investors to place nominees on the proxy when there is a 20 percent vote to withhold one or more members. The SEC's rule is for 35 percent.

And in response to trading scandals in the mutual fund industry, CalPERS introduced and adopted principles that call for reforms at mutual fund companies, including higher standards for disclosure of trading costs, fees and fund manager compensation.

Like many large funds, CalPERS is indexed, which means that it is a permanent shareholder of many individual stocks where the stake is too big to offload without causing a major market disruption. But the fund has shown that there are other methods used to punish companies for poor performance or perceived improprieties. "Big funds like these have used public embarrassment of a company, the media or long, drawn-out proxy fights to get their point across," said Hawley. "CalPERS has been a major counterweight to the chief executive and corporate boards."

CalPERS was established by state law in 1932 to provide retirement benefits to public employees and as the population grew the need for civic workers grew and by extension the fund grew. But it wasn't until 1984 -- during the era of the corporate raiders -- that the fund made its commitment to corporate governance.

Nearly a decade later in 1992 the state's voters approved Proposition 162, which gave the CalPERS board absolute and exclusive authority over the administration and investment of retirement funds throughout the state, putting it well on its way to being the powerhouse it is today.

"CalPERS is the 800-pound gorilla of corporate governance," said Nell Minow, co-author of the book "Power and Accountability" and editor of The Corporate Library, an investment research firm. "They've shown over and over again that they will get involved if they don't like what they see. And their presence is felt the world over."