Anchoring Effect of Pre-Meeting Vote Disclosures: Evidence from the National Pension Service

Abstract

This study investigates whether pre-meeting vote disclosures by large asset owners can amplify the influence of their votes at shareholders' meetings. We utilize the newly adopted 2019 rule that mandates Korea’s National Pension Service (NPS) to disclose voting decisions before the shareholders’ meeting. Firms subject to this pre-meeting disclosure must meet either of two conditions: the NPS holds at least 10% of the firm’s voting shares or the firm’s weight in the NPS domestic equity portfolio is at least 1%. Employing a regression discontinuity design and difference-in-differences analyses, we find that the NPS pre-meeting disclosure causes other institutional investors to increase their conformity to the NPS votes.

We further find that this effect mainly originates from the resolutions that the NPS votes against management; this result is pronounced among the institutional investors who are more likely to face problems related to conflicts of interest.