Pension Fund Board Governance and Asset Allocation: Evidence from Switzerland
45 Pages Posted: 6 Mar 2019
Date Written: January 15, 2019
We study whether pension fund board governance relates to asset allocation and show that well-governed boards have greater international diversification and lower cash holdings. In particular, boards that establish comprehensive investment policies invest more in risky assets, in foreign assets and hold less cash. These results are consistent with prudent behavior and can be explained by the limits that a comprehensive investment policy puts on the liability of trustees and by the financial expertise embedded in the process. Also, the presence of external financial experts is associated with greater diversification but their role in lowering cash holdings is limited.
Keywords: Pension Funds, Board Governance, Asset Allocation, Switzerland
JEL Classification: G11, G20, G23
Suggested Citation: Suggested Citation