Transcriptional activator. Recognizes and binds to the DNA sequence 5'-TGT[GT][GT]ATT-3'. Required for induction of the goosecoid (GSC) promoter by TGF-beta or activin signaling. Forms a transcriptionally active complex containing FOXH1/SMAD2/SMAD4 on a site on the GSC promoter called TARE (TGF-beta/activin response element). Interacts with the MH2 domains of SMAD2 and SMAD3. Expressed predominantly throughout the epiblast before gastrulation and declines as development progresses. The FM region is required for binding SMAD2/SMAD4 complexes. FM2 is more effective than FM1 and only interacts with phosphorylated SMAD2 that is in an activated SMAD complex (By similarity). Fails to bind DNA and cannot confer activin response element responsiveness.