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When boards use related parties: outsourcing and superannuation fund performance

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  • Kevin Liu
  • Elizabeth Ooi

Abstract

Superannuation funds heavily outsource key fund functions to service providers who play a crucial role in superannuation fund operations and affecting Australians’ retirement savings. We examine the impact of related party service provider usage and trustee‐director affiliation on investment performance. We find that for‐profit funds significantly underperform when using related party service providers. The underperformance is more severe when the board is controlled by more affiliated trustee‐directors and belongs to a vertically integrated conglomerate group. Our results raise concerns about whether recent regulatory reforms increasing trustee‐directors’ duties effectively address the conflicts of interest inherent in related party service provider arrangements.

Suggested Citation

  • Kevin Liu & Elizabeth Ooi, 2019. "When boards use related parties: outsourcing and superannuation fund performance," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 59(S1), pages 715-746, April.
    • Handle: RePEc:bla:acctfi:v:59:y:2019:i:s1:p:715-746
    DOI: 10.1111/acfi.12379
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    Cited by:

    1. Jin Sug Yang & Anna Bedford & Martin Bugeja, 2023. "Director expertise and co‐option in industry superannuation funds?," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(S1), pages 1249-1283, April.
    2. Peng, Xiaowen & Alpert, Karen & Hsu, Grace Chia-Man, 2020. "Switching between superannuation funds: Does performance and marketing matter?," Pacific-Basin Finance Journal, Elsevier, vol. 63(C).

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