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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. The author examines 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, the author finds that AFL-CIO affiliated shareholders are significantly more supportive of director nominees once the AFL-CIO no longer represents workers or represents significantly fewer workers at a given firm.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.
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