Pension Fund Board Governance and Asset Allocation: Evidence from Switzerland
Journal of Pension Economics and Finance (JPEF), forthcoming
49 Pages Posted: 6 Mar 2019 Last revised: 8 Feb 2022
Date Written: October 1, 2021
We study whether pension fund board governance relates to asset allocation. Pension funds with well-governed boards have greater international diversification, lower cash holdings and, when pension funds are small, invest more in risky assets. In particular, pension fund boards that establish comprehensive investment policies invest more in equities, in foreign assets and hold less cash. We argue that a comprehensive investment policy is likely to serve as a proxy for the financial expertise available to the fund while it provides the set up to facilitate decision making. Finally, we further show that the presence of external financial experts is also associated with lower cash holdings.
Keywords: Pension Funds, Board Governance, Asset Allocation, Switzerland
JEL Classification: G11, G20, G23
Suggested Citation: Suggested Citation