AFL-CIO Proxy Voting: A Response by Agrawal

The Agrawal study is described on our blog here; the initial AFL-CIO response is available on our blog here; two reactions to that AFL-CIO response – from Ashwini Agrawal and from Steven Kaplan – are available here; the subsequent AFL-CIO response is available here.

I am writing to respond to the recent post by Daniel Pedrotty, director of the AFL-CIO Office of Investment, critiquing my study on AFL-CIO proxy voting.

First, in contrast to Pedrotty’s claim that I was never in contact with the AFL-CIO Office of Investment, I contacted Michele Evans, office administrator of the AFL-CIO Office of Investment by email on May 22, 2007, and received a reply from her by email on June 1, 2007. The email exchange is available here.

Second, I would like to respond to Pedrotty’s request that I share my data with the AFL-CIO on a confidential basis with the AFL-CIO committing not to share it with any rival researcher and to use it solely to “check the accuracy” of my findings. Given that the AFL-CIO has not provided me data and information when I have requested it and has made what I consider false and misleading statements about my research, I have serious concerns, as do my advisors, that the AFL-CIO will misuse and mischaracterize any data I send them prior to publication. I therefore will not enter into the requested confidentiality agreement with them. Instead, I suggest they consult the public sources of data I use in writing my paper and replicate the findings themselves.

Third, I would like to respond to Pedrotty’s claim that the study is not possible to replicate using public information. Pedrotty makes a useful point that I did not fully describe the information I obtained from Investor Relations departments, however, as I will make clear in the next version of the paper, the findings in the paper are the same if one relies on the public data sources described in the paper. The next draft will explain that I contacted four companies whose investor relations departments confirmed, consistent with the lack of discussion of unionized workers in their 10-K’s, that they did not have union workers (an assumption I discuss in the paper). I will also make sure to fully describe any information I get from additional investor relations departments or other sources that I may choose to contact while revising my study.

As for other claims raised by Pedrotty, I have addressed them already in my earlier post, available here.

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One Comment

  1. Daniel Pedrotty
    Posted Friday, April 18, 2008 at 8:07 pm | Permalink

    It’s important to make clear one point, which Mr. Agrawal attempts to obscure. As the e-mail traffic below reveals, Mr. Agrawal has refused every opportunity to meet with or talk to the AFL-CIO program staff.

    Readers of this blog should judge for themselves the seriousness of researchers who refuse to meet with the subject of their study, while also not disclosing their data set.

    >>> Daniel Pedrotty 02/29/08 10:56 PM >>>
    Ashwini:

    Over the past month we have attempted to engage in a dialogue with you about your unpublished, unreviewed paper entitled which in substantial part purports to be an effort to understand how the AFL-CIO and its affiliated funds behave in the area of proxy voting in board of director elections for public companies. We have received your email refusing to meet with us to discuss your paper.

    You have written a paper that in substance makes the very serious and completely false accusation that the AFL-CIO and the AFL-CIO Staff Retirement Fund vote their proxies based in part on whether the employees of the company in question are members of an AFL-CIO affiliated union, rather than based on the Fund’s proxy voting guidelines. You have published this accusation by posting this paper on public websites, and apparently circulating it widely, which has resulted in it being cited on multiple occasions in the business press. Then you refuse to discuss your findings, disclose your data set, or respond to substantive and fundamental criticisms of your paper.

    After receiving our emails requesting peer review and the release of your data, you published a revised version on February 7th that failed to address any of our comments and appears not to have been peer reviewed. You further have failed to release your data.

    Consequently, we repeat our request to you to release the data set which you have used to build your regression model. As we have noted in prior correspondence, you appear to have constructed key variables in your data set such that it is impossible to replicate or evaluate your work without access to your unique data. Second, we repeat our request to you that you not further circulate your paper without having it subject to peer review by experts in both the fields of corporate governance and labor relations.

    Furthermore, we wish to restate clearly the reasons why your conclusions are mistaken and your regression model incorrect.

    1) You use the voting behavior of mutual funds to define the corporate governance characteristics of the companies you are looking at, rather than the voting recommendations of more independent sources such as Risk Metrics or Glass Lewis, or the evaluations of corporate governance published by sources such as the Corporate Library.
    2) You appear to have treated companies with mixed representation by AFL-CIO unions and Change to Win unions as though they were entirely represented by AFL-CIO unions.
    3) You have made no effort to inquire into the methods by which AFL-CIO proxies are actually voted—had you done so you would have discovered that the proxy advisory firm that votes our proxies votes for both AFL-CIO affiliated funds and Change to Win affiliated funds, and votes all funds’ proxies the same.
    4) While you have gathered data on certain Change to Win affiliated funds, you did not compare their voting behavior over time with that of the AFL-CIO, a simple check on whether your theory that union affiliation affected proxy voting was correct.

    We continue to believe that a thorough airing of these issues would demonstrate that the conclusions in your paper are mistaken. However, it is impossible to air these issues without your cooperation. We ask that in addition to disclosing your data you agree to an open seminar to discuss these issues. We believe such a seminar would be most useful if held at an academic institution such as either the University of Chicago or Harvard University, on whose blog you initially posted your paper. Please let us know if you are agreeable, in addition to responding to our request to release your data and to submit your paper to peer review prior to any further circulation. Thank you.

    Daniel Pedrotty
    AFL-CIO Office of Investment

    >>> Daniel Pedrotty 02/07/08 6:52 PM >>>
    Ashwini:

    In case you misunderstand, we want to meet with you regarding your research model. Your model is wrong, and it’s impossible to work through this issue without a discussion. It would also be helpful if you shared your data set so we could contribute in a meaningful way to your research of our work.

    Dan

    >>> “Agrawal, Ashwini K” 2/6/2008 11:14 PM >>>

    Dan,
    As I have told you, in connection with revising my paper, I am committed to receiving and considering all relevant data and material information that you care to share with me via email or hard copy delivery, but I am not interested in meeting with you. This is my last communication to you on this subject.
    Thank you,
    Ashwini

    From:Daniel Pedrotty [mailto:Dpedrott@aflcio.org]
    Sent: Tuesday, February 05, 2008 11:32 AM
    To: Agrawal, Ashwini K
    Cc: Steven Kaplan; Rauh, Joshua; Marianne Bertrand; Morten Sorensen; Leftwich, Richard; Theodore Stamatakos
    Subject: RE: AFL-CIO Proxy Vote Report

    Ashwini:

    The AFL-CIO is the subject of your paper, and we have material information related to your research. We would like to discuss your research model and findings, especially because they run completely contrary to the way we operate. We request a meeting with you within the next week. Should you refuse to meet with us, we believe that implicates “the suppression of relevant evidence or data” under the University’s Policy on Academic Fraud.

    Dan

    >>> “Agrawal, Ashwini K” 2/4/2008 6:46 PM >>>

    Dan,
    Thank you for your email. I appreciate your comments and criticisms of my research. I will certainly take them into account as I revise my paper, and I will be in touch (via email) if I have any questions or feel that it would be constructive to meet with you.
    Best regards,
    Ashwini

    From:Daniel Pedrotty [mailto:Dpedrott@aflcio.org]
    Sent: Monday, February 04, 2008 4:06 PM
    To: Agrawal, Ashwini K
    Subject: RE: AFL-CIO Proxy Vote Report

    Ashwini:

    Please call me Dan. Let me be clear – we’d like to meet with you and provide you with useful information on how matters work at the Federation. We’re happy to make a trip out to Chicago, or host you here at the AFL-CIO (and pick up your expenses, unless you’d prefer otherwise). Are you willing to meet?

    Dan

    >>> “Agrawal, Ashwini K” 2/4/2008 1:35 PM >>>

    Dear Mr. Pedrotty,
    Thank you for your email. I will consider your comments as I continue to develop and revise this paper.
    Best regards,
    Ashwini

    From:Daniel Pedrotty [mailto:Dpedrott@aflcio.org]
    Sent: Monday, February 04, 2008 8:54 AM
    To: Steven Kaplan
    Cc: Agrawal, Ashwini K; Rauh, Joshua; Marianne Bertrand; Morten Sorensen
    Subject: Re: AFL-CIO Proxy Vote Report

    Thank you for your message. We are seeking a meeting directly with Mr. Agrawal. We hope he is capable of responding to our request himself, especially when he represented in his paper that he had substantive contact with the AFL-CIO when he did not. We expect he would be pleased to meet with us, and we will contact him directly.

    Dan

    >>> Steven Kaplan 2/3/2008 10:32 AM >>>
    Thank you for your comments. As with any comments Ashwini or any researcher receives in presenting ongoing research, we will consider those comments and others he has received in the normal course of the research process.

    SK

    On Feb 1, 2008, at 5:14 PM, Daniel Pedrotty wrote:

    Mr. Agrawal:

    Please find attached a letter discussing a recent report we issued, entitled “Facts About the AFL-CIO’s Proxy Votes.” The full report is available here: http://www.aflcio.org/corporatewatch/capital/upload/facts_aflcio_proxy_votes.pdf

    As the letter mentions, I will follow-up with you next week.

    Regards,

    Dan

    Daniel F. Pedrotty
    Director

    AFL-CIO Office of Investment
    (202) 637-5379 (voice)
    (202) 631-9854 (cell)
    (202) 508-6992 (fax)