An empirical analysis on the exercise of voting rights by the National Pension Service
Yang, Cheol-Won
The separate structure of the ownership and control of the corporation implies the risk of the agent problem that the manager can pursue his private interests. As a solution to this, the monitoring role of institutional investors is emphasized recently. This study examines whether the National Pension Service (hereinafter referred to as the "NPS"), which is the largest pension fund in Korea, performs this role appropriately. In particular, we analyze the influence and feasibility of the exercise of voting rights by the NPS using the data disclosed by the NPS in 2015. The results show that the NPS shows a 2% abnormal return over 10 trading days after displaying the objection at the general shareholders' meeting, confirming that the market is positive about the opposing opinions of the NPS. In particular, it provides a high abnormal return of about 6% in merger and acquisition approval related matters. In addition, when analyzing the characteristics of firms, firms with low growth rates and poor corporate governance are more likely to be opposed by the NPS.
Agent Problem,Monitoring,National Pension Service,Voting Rights,Merger and Acquisition