Corporate Governance Objectives of Labor Union Shareholders: Evidence from Proxy Voting
Ashwini K. Agrawal
London School of Economics & Political Science (LSE)
July 1, 2011
Review of Financial Studies, Forthcomin
NYU Stern Working Paper Series No. Fin-08-006
Labor union pension funds have become increasingly vocal in governance matters; however, their motives are subject to fierce debate. I examine the proxy votes of AFL-CIO union funds around an exogenous change in the union representation of workers across firms. AFL-CIO affiliated shareholders become significantly less opposed to directors once the AFL-CIO labor organization no longer represents a firm’s workers. Other institutional investors including mutual funds and public pension funds do not exhibit similar voting behavior. Union opposition is also associated with negative valuation effects. The data suggest that some investors pursue worker interests rather than maximize shareholder value alone.
Number of Pages in PDF File: 54
Keywords: Corporate Governance, Institutional Investors, Proxy Voting, Board of Directors, Labor Union
JEL Classification: G30, G34, G38, J50, J52, J53
Date posted: October 16, 2008 ; Last revised: August 29, 2011
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