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Corporate Governance Objectives of Labor Union Shareholders: Evidence from Proxy Voting

Review of Financial Studies, Forthcomin

NYU Stern Working Paper Series No. Fin-08-006

54 Pages Posted: 16 Oct 2008 Last revised: 29 Aug 2011

Ashwini K. Agrawal

London School of Economics & Political Science (LSE)

Date Written: July 1, 2011

Abstract

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 AFL-CIO affiliated shareholders become significantly less opposed to directors once the AFL-CIO labor organization no longer represents a firm’s workers.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.

Keywords: Corporate Governance, Institutional Investors, Proxy Voting, Board of Directors, Labor Union

JEL Classification: G30, G34, G38, J50, J52, J53

Suggested Citation

Agrawal, Ashwini K., Corporate Governance Objectives of Labor Union Shareholders: Evidence from Proxy Voting (July 1, 2011). Review of Financial Studies, Forthcomin; NYU Stern Working Paper Series No. Fin-08-006. Available at SSRN: https://ssrn.com/abstract=1285084

Ashwini K. Agrawal (Contact Author)

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

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