Fund Governance, Fees and Performance in Australian Corporate Superannuation Funds: A Non-Parametric Analysis

32 Pages Posted: 12 Jul 2012 Last revised: 4 Oct 2012

See all articles by Thi Thuy Chi Nguyen

Thi Thuy Chi Nguyen

Royal Melbourne Institute of Technolog (RMIT University)

Monica Tan

RMIT University; Financial Research Network (FIRN)

Marie-Anne Cam

RMIT University; Financial Research Network (FIRN)

Multiple version iconThere are 2 versions of this paper

Date Written: July 11, 2012

Abstract

We investigate the governance structure and practices of Australian corporate superannuation funds and explore the link between a fund’s governance, fees and performance. Overall, it appears that the funds have governance structures that are prone to agency conflicts, lack of transparency and that trail behind overall corporate governance standards. We find that a fund’s governance practices do not affect performance, but they do affect fees. In addition, the international subsidiary and listing status of the sponsoring firms are found to affect fund fees. As a fund’s board size increases, so do the number of asset consultants being hired, and fund fees grow. The relationships between fund governance, management and fees are significantly influenced by fund size and are non-linear. We also found a potential link in the governance practices between the sponsoring firms and their funds. Our study provides important insight into how, although trustee structure does not have a direct impact, their strategic decisions affect how funds operate and agency problems could be controlled. Furthermore, adequate trustee competency that addresses the specific needs and nature of each fund must accompany fund governance structures; a prescriptive governance framework does not fit all.

Keywords: pension fund governance, trustee, fund costs, fund performance

JEL Classification: G23, G39

Suggested Citation

Nguyen, Thi Thuy Chi and Tan, Monica and Cam, Marie-Anne, Fund Governance, Fees and Performance in Australian Corporate Superannuation Funds: A Non-Parametric Analysis (July 11, 2012). Available at SSRN: https://ssrn.com/abstract=2103963 or http://dx.doi.org/10.2139/ssrn.2103963

Thi Thuy Chi Nguyen

Royal Melbourne Institute of Technolog (RMIT University) ( email )

124 La Trobe Street
Melbourne, 3000
Australia

Monica Tan (Contact Author)

RMIT University ( email )

35 Herlihys Rd
Templestowe Lower, 3107
Australia
403388233 (Phone)

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Marie-Anne Cam

RMIT University ( email )

Business
Level 12, 239 Bourke Street
Melbourne, Victoria 3000
Australia
+61 399255503 (Phone)
+61 399255986 (Fax)

HOME PAGE: http://rmit.com.au/browse/About%20RMIT%2FContact%2FAll%20contacts%2FStaff%2Fby%20name%2FC%2F;ID=ldfn

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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