Pension Fund Board Governance and Asset Allocation: Evidence from Switzerland

45 Pages Posted: 6 Mar 2019 Last revised: 5 Dec 2019

See all articles by Nadège Bregnard

Nadège Bregnard

University of Neuchatel

Carolina Salva

University of Neuchatel

Date Written: November 15, 2019

Abstract

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. To rationalize these findings, we argue that a comprehensive investment policy is likely to proxy for the financial expertise available to the fund while it provides the set up to facilitate decision making. Further, we show that the presence of external financial experts is associated with lower cash holdings and that the greater risk-taking is consistent with prudent behavior.

Keywords: Pension Funds, Board Governance, Asset Allocation, Switzerland

JEL Classification: G11, G20, G23

Suggested Citation

Bregnard, Nadège and Salva, Carolina, Pension Fund Board Governance and Asset Allocation: Evidence from Switzerland (November 15, 2019). Available at SSRN: https://ssrn.com/abstract=3334950 or http://dx.doi.org/10.2139/ssrn.3334950

Nadège Bregnard

University of Neuchatel ( email )

Switzerland

Carolina Salva (Contact Author)

University of Neuchatel ( email )

AL Breguet 2
CH-2000 Neuchatel
Switzerland

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