Ask of National Pension Service for Higher Dividend and Firm Value: Evidence from Korea

In this chapter, we examine the effect of ask of Korea's National Pension Service for higher dividend on the firm value. There is a conflicting view on the dividend pressure of the National Pension Service. First, the dividend pressure of the National Pension Service contributes not only to reducing the agency problem, which is a disadvantage for Korean companies' ownership management, but also to reducing the Korea discount, which is a low dividend. The other hand, it is the so-called pension socialism that National Pension Service engages in the dividend policy which is the essence of corporate management with a high stake. This study is conducted on Korean listed companies from 2011 to 2016 and has constructed a test sample using propensity score matching. The results show that the dividend pressure of National Pension Service doesn't have a significant effect on the firm value. This study is expected to provide useful information for pension funds to exercise voting rights. Also, this study is expected to provide further evidence of a study that verifies the relationship between dividend and firm value by examining the effect of external pressures on dividend policy on firm value.