Holders of the Purse Strings: Governance and Performance of Public Retirement Systems
Public sector pension plans are managed in diverse ways, with governance policies distinguished according to their board composition and size, how the trustees structure their investment decisions, what restrictions are placed on their investments, and whether they have independent performance evaluations. We examine how these governance policies affect pension investment strategies, and how those strategies in turn affect the funds' financial performance. Methods. Drawing on two national surveys of state and local public retirement systems in 1992 and 1993, we ask if pension governance policies affect whether they (1) invest tactically in response to changing conditions; (2) allocate assets between equities and fixed-income holdings; (3) contract for external asset management; and (4) invest outside the U.S. Results. Empirical analysis reveals that government policies - especially independent performance evaluations - predict investment decisions in all four areas. These investment strategies are found in turn to affect subsequent fund performance: preferential investing in equities and abroad increased annual returns on their asets by as much as one to two percentage points. Conclusions. The ways that public pensions are governed have a direct bearing on how they invest their assets, and the investment strategies in turn directly affect the financial performance of their holdings.
(This abstract was borrowed from another version of this item.)
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
|Date of creation:|
|Publication status:||Published in Social Science Quarterly 81 (June, 2000): 491-506.|
|Contact details of provider:|| Postal: The Wharton School, 3641 Locust Walk, 304 CPC, Philadelphia, PA 19104-6218|
Web page: http://www.pensionresearchcouncil.org/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Olivia S. Mitchell & Roderick Carr, "undated".
"State and Local Pension Plans,"
Pension Research Council Working Papers
95-13, Wharton School Pension Research Council, University of Pennsylvania.
- Olivia S. Mitchell & Roderick Carr, 1995. "State and Local Pension Plans," NBER Working Papers 5271, National Bureau of Economic Research, Inc.
- Olivia S. Mitchell Ping-Lung, "undated". "Public Pension Plan Efficiency," Pension Research Council Working Papers 95-11, Wharton School Pension Research Council, University of Pennsylvania.
- Mark J. Roe, 1997. "The Political Roots Of American Corporate Finance," Journal of Applied Corporate Finance, Morgan Stanley, vol. 9(4), pages 8-22.
- Ping-Lung Hsin & Olivia Mitchell, 1994. "The Political Economy of Public Pensions: Pension Funding, Governance, and Fiscal Stress," Revista de Analisis Economico – Economic Analysis Review, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines, vol. 9(1), pages 151-168, June.
- Ping-Lung Hsin & Olivia S. Mitchell, "undated". "The Political Economy of Public Pensions: Pension Funding, Governance, and Fiscal Stress," Pension Research Council Working Papers 94-6, Wharton School Pension Research Council, University of Pennsylvania.
- Olivia S. Mitchell & Ping Lung Hsin, 1994. "Public Sector Pension Governance and Performance," NBER Working Papers 4632, National Bureau of Economic Research, Inc.
- Yermack, David, 1996. "Higher market valuation of companies with a small board of directors," Journal of Financial Economics, Elsevier, vol. 40(2), pages 185-211, February.
- Weisbach, Michael S., 1988. "Outside directors and CEO turnover," Journal of Financial Economics, Elsevier, vol. 20(1-2), pages 431-460, January.
- Olivia S. Mitchell & Robert S. Smith, "undated". "Public Sector Pension Funding," Pension Research Council Working Papers 94-4, Wharton School Pension Research Council, University of Pennsylvania. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:wop:pennpr:2000-3. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Hilary Farrell)
If references are entirely missing, you can add them using this form.