Abstract
ABSTRACT This study examines the effects of National Pension Service (NPS) of Korea and the Stewardship Code on dividend policy and firm value. We find that NPS increases the dividend yield of firms, and the effects are more pronounced after the implementation of the code. Furthermore, the code forces firms to pay involuntarily high dividends compared to industry rivals. Firm value is negatively associated with the ownership of NPS which is exacerbated after the code. Results highlight the agency problem in public pension funds that the government pursues its own interests rather than those of the beneficiaries.
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