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http://hdl.handle.net/2451/27848
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| Title: | Corporate Governance Objectives of Labor Union Shareholders: Evidence
from Proxy Voting |
| Authors: | Agrawal, Ashwini |
| Issue Date: | 2-Feb-2009 |
| Series/Report no.: | FIN-08-006 |
| Abstract: | Labor union shareholders have become increasingly vocal in matters of
corporate governance, however, their motives have been subject to much
debate in the academic literature and business press. I examine the
proxy votes of AFL-CIO pension funds in director elections of 504
companies from 2003 to 2006. Using the 2005 AFL-CIO breakup as a source
of exogenous variation in the union affiliations of workers across
firms, I find that AFL-CIO affiliated shareholders are significantly
more supportive of director nominees once the AFL-CIO no longer
represents workers or represents significantly fewer workers at a given
firm. Other institutional investors do not exhibit the same changes in
voting behavior. This difference suggests that labor relations affect
the voting patterns of some union shareholders. I also find that AFL-CIO
funds are more likely to vote against directors of firms in which there
is greater frequency of plant-level conflict between labor unions and
management during collective bargaining and union member recruiting. The
sensitivity of director votes to union conflict, however, decreases at
firms in which the AFL-CIO no longer represents workers or represents
significantly fewer workers. The evidence suggests that AFL-CIO
affiliated shareholders vote against directors partly to support union
worker interests rather than increase shareholder value alone. |
| URI: | http://hdl.handle.net/2451/27848 |
| Appears in Collections: | Finance Working Papers
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