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The Role of Governance in Retirement Investments: Evidence from Variable Annuities

Author

Listed:
  • Richard Evans

    (Darden School of Business at the University of Virginia)

  • Rüdiger Fahlenbrach

    (Fisher College of Business at the Ohio State University)

Abstract

We study the relative importance of market governance and non-market governance in retirement investments using a sample of variable annuities. Variable annuity investors are significantly less sensitive to performance and fees than mutual fund investors. Consistent with a complementary role of market and non-market governance, other governance mechanisms play a stronger role for variable annuity funds. Variable annuity sponsors add alternative investment options and replace advisors on behalf of their investors after poor performance and high fees. These other governance mechanisms are ineffective, however, whenever conflicts of interest exist between variable annuity sponsors and fund advisors.

Suggested Citation

  • Richard Evans & Rüdiger Fahlenbrach, 2007. "The Role of Governance in Retirement Investments: Evidence from Variable Annuities," Working Papers, Center for Retirement Research at Boston College wp2007-20, Center for Retirement Research, revised Oct 2007.
    • Handle: RePEc:crr:crrwps:wp2007-20
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    File URL: http://crr.bc.edu/working-papers/the-role-of-governance-in-retirement-investments-evidence-from-variable-annuities/
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    References listed on IDEAS

    as
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    5. Erik R. Sirri & Peter Tufano, 1998. "Costly Search and Mutual Fund Flows," Journal of Finance, American Finance Association, vol. 53(5), pages 1589-1622, October.
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