The Role of Public Pension Funds in Corporate Governance: Evidence from Proxy Voting

48 Pages Posted: 21 Sep 2018

See all articles by Ying Duan

Ying Duan

Simon Fraser University (SFU) - Beedie School of Business

Yawen Jiao

University of California, Riverside

Kinsun Tam

SUNY University at Albany

Date Written: September 20, 2018

Abstract

Public pension funds argue that proxy voting is a primary method of governing companies for them. This paper examines their proxy voting behavior and documents several important determinants. Compared to institutional investors with greater business ties with portfolio firms (e.g., mutual funds), public pension funds are more inclined to vote in favor of (against) shareholder (management) proposals. They support their fellow public pension funds’ and labor unions’ proposals the most and individual investors’ proposals the least. Although more supportive than mutual funds, public pension funds support socially responsible proposals to a lesser degree than other types of shareholder proposals. Public pension funds are more willing to vote against management proposals for firms headquartered in their home state. Funds active in filing shareholder proposals are more likely to vote against (in favor of) management (shareholder) proposals, so are funds from states with strong democratic legislators and public unions. Finally, public pension funds’ votes are important to the voting outcomes of both management and shareholder proposals.

Keywords: public pension funds; proxy voting; corporate governance

JEL Classification: G23; G34

Suggested Citation

Duan, Ying and Jiao, Yawen and Tam, Kinsun, The Role of Public Pension Funds in Corporate Governance: Evidence from Proxy Voting (September 20, 2018). Available at SSRN: https://ssrn.com/abstract=3252801 or http://dx.doi.org/10.2139/ssrn.3252801

Ying Duan (Contact Author)

Simon Fraser University (SFU) - Beedie School of Business ( email )

8888 University Drive
Burnaby, British Colombia V5A 1S6
Canada

Yawen Jiao

University of California, Riverside ( email )

Riverside, CA 92521
United States

Kinsun Tam

SUNY University at Albany ( email )

1400 Washington Avenue
Building, Room 109
Albany, NY 12222
United States

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