Corporate Governance and Pension Fund Performance
This study provides new evidence on the impact of governance on the performance of privately defined contribution pension plans. Using a hand collected data set on governance factors, the study shows that the external and internal governance mechanisms in pension plans are weak. One explanation for this weakness is the potential conflict between the pension beneficiaries and the fund's owner, which depends on who bears the investment risk in the pension plan. Hence, different governance factors are found to be important for pension fund return on invested assets and also for its economic performance. Consequently, the overall policy conclusion is that more focus should be put on the governance of the pension funds, taking into account the different interests of the beneficiaries and owners as it may determine their performance. (original abstract)
- Adams, J. C., Mansi, S. A., and Nishikawa, T. (2010). Internal governance mechanisms and operational performance: Evidence from index mutual funds. Review of Financial Studies 23(3), 1261-1286.
- Andrews, E. S. (2006). Pension reform and the development of pension systems: An evaluation of World Bank assistance. Washington, DC: World Bank Publications.
- Agrawal, A., and Knoeber, C.R. (2001). Do some outside directors play a political role? Journal of Law and Economics 44, 179-198.
- Antolín, P., and Stewart, F. (2009). Private pensions and policy responses to the financial and economic crisis. OECD Working Papers on Insurance and Private Pensions No. 36. OECD publishing, © OECD. doi:10.1787/224386871887
- Bhagat, S., Bolton, B. and Romano R. (2008). The promise and peril of corporate governance indices. Columbia Law Review 108(8), 1803-1882.
- Bebchuk, L., and Cohen, A. (2005). The costs of entrenched boards. Journal of Financial Economics 78, 409-433.
- Bebchuk, L. A., and Weisbach, M. S. (2010). The state of corporate governance research. Review of Financial Studies 23(3), 939-961.
- Becht, M., Bolton, P., and Röell, A. A. (2002). Corporate governance and control. ECGI - Finance Working Paper No. 02/2002. Available at SSRN: http://ssrn.com/abstract=343461 or http://dx.doi.org/10.2139/ssrn.343461
- Berger, A. N., Clarke, G. R., Udell, G. F., Cull, R., and Klapper, L. F. (2005). Corporate governance and bank performance: A Joint Analysis of the Static, Selection, and Dynamic Effects of Domestic, Foreign, and State Ownership. World Bank Policy Research Paper No. 3632. Available at SSRN: http://ssrn.com/abstract=756948
- Besley, T., and Prat, A. (2003). Pension fund governance and the choice between defined benefit and defined contribution plans. CEPR Discussion Paper No. 3955.
- Brown, L. D., and Caylor, M. L. (2004). Corporate governance and firm performance. Available at SSRN: http://ssrn.com/abstract=586423.
- Carter, D. A., Simkins, B. J., and Simpson, W. G. (2003). Corporate governance, board diversity, and firm value. Financial Review 38, 33-53.
- Casterella, J., Knechel, W. R., and Walker, P. L. (2004). The relationship of audit failures and auditor tenure. Proceedings, University of Kansas Auditing Symposium, May.
- Chen, G., Firth, M., Gao, D. N., and Rui, O. M., (2006). Ownership structure, corporate governance, and fraud: Evidence from China, Journal of Corporate Finance 12, 424-448.
- Core, J., Holthausen, R., and Larcker, D. (1999). Corporate governance, chief executive officer compensation, and firm performance. Journal of Financial Economics 51(3), 371-406.
- Cronqvist, H., and Thaler, R. (2004). Design choices in privatized social security systems: Learning from the Swedish experience. American Economic Review Papers and Proceedings 94, 424-428.
- Daines, R., Gow, I. D., and Larcker, D. F. (2010). Rating the ratings: How good are commercial governance ratings? Journal of Financial Economics 98(3), 439-461.
- Denis, D. J., and Denis, D. K. (1995). Performance changes following top management dismissals. Journal of Finance 50, 1029-1057.
- Davis, L. R., Soo, B., and Trompeter, G. (2003). Auditor tenure, auditor independence and earnings management. Working Paper, Boston College. Boston, MA.
- Faccio, M. (2006). Politically-connected firms. American Economic Review 96, 369-386.
- Ferris, S. P., Jagannathan, M., and Pritchard, A.C. (2003). Too busy to mind the business? Monitoring by directors with multiple board appointments. Journal of Finance 58, 1087-1111.
- Francis, J. R. (2004). What do we know about audit quality? British Accounting Review 34, 345-368.
- Franks, J. R., Mayer, C., and Renneboog, L. (2001). Who disciplines management in poorly performing companies? Journal of Financial Intermediation 10, 209-248.
- Gillan, S. L., Hartzell, J. C., and Starks, L. T. (2006). Tradeoffs in corporate governance: Evidence from board structures and charter provisions. Available at SSRN: http://ssrn.com/abstract=917544.
- Gompers, P. A., Ishii, J. L., and Metrick, A. (2003). Corporate governance and equity prices. Quarterly Journal of Economics 118(1), 107-155.
- Guercio Del, D. and Hawkins, J. (1999). The motivation and impact of pension fund activism. Journal of Financial Economics 52, 293-340.
- Gugler, K. and Yurtoglu, B. B. (2003). Corporate governance and dividend pay-out policy in Germany. European Economic Review 47, 731-758.
- Jensen, M. C. (1993). The modern industrial revolution, exit, and the failure of internal control systems. Journal of Finance 48, 831-880.
- Jenter, D., and Lewellen, K. (2010). Performance-induced CEO Turnover. Working Paper, Stanford University. Available at: http://areas.kenan-flagler.unc.edu/finance/JHfinance/Documents/Jenter_1_18_10_CEO%20turnover%20Jackson%20Hole.pdf
- Kaplan, S. (1994). Top executive rewards and firm performance: A comparison of Japan and the US. Journal of Political Economy 102, 510-546.
- Kaplan, S. N., and Minton, B. A. (1994). Appointments of outsiders to Japanese boards: Determinants and implications for managers, Journal of Financial Economics 36(2), 225-258.
- Karpoff, J. M., and Lott Jr., J. R. (1993). The reputational penalty firms bear from committing criminal fraud. Journal of Law and Economics 36, 757-802.
- Kim, H., and Lim, C. (2010). Diversity, outside directors and firm valuation: Korean evidence, Journal of Business Research 63(3), 284-291.
- Kominek, Z. (2006) Regulatory induced herding? Evidence from Polish pension funds. European Bank for Reconstruction and Development, Working Paper No. 96. Available at: http://www.ebrd.com/downloads/research/economics/workingpapers/wp0096.pdf
- Kowalewski, O. (2008), Social services in Poland: The pension system. In M. A. Weresa (ed.), Poland competitiveness report 2008. Focus on services. Warsaw: WSE Publishing House.
- Kowalewski, O., Stetsyuk, I., and Talavera, O. (2008). Does corporate governance determine dividend payouts in Poland? Post-Communist Economies 20(2), 203-218.
- Lean, D. F., Ogur, J. D. and Rodgers, R. P. (1985). Does collusion pay... does antitrust work. Southern Economic Journal 51, 828-839.
- Masulis, R. W., Wang, C., and Xie, F., (2010) Globalizing the boardroom - the effects of foreign directors on corporate governance and firm performance. AFA 2011 Denver Meetings Paper. Available at SSRN: http://ssrn.com/abstract=1572838.
- Monks, R. A. G., and Minow N. (1991). Power and accountability. Dunmore, PA: HarperCollins.
- Myners Report (2001). Institutional Investment in the UK: A Review. London, UK: HM Treasury
- Netter, J. M., Poulsen, A. B., and Stegemoller, M. A. (2009). The rise of corporate governance in corporate control research. Journal of Corporate Finance 15(1), 1-9.
- Park, Y. W. and Shin, H. H. (2004). Board composition and earnings management in Canada, Journal of Corporate Finance 10, 431-457.
- Rudolph, H., Hinz, R., Antolín, P., and Yermo, J. (2010). Evaluating the financial performance of pension funds. In R. Hinz, H.P. Rudolph, P. Antolín, and J. Yermo, (eds.), Evaluating the Financial Performance of Pension Funds. (Chapter 1). Washington, DC: The World Bank.
- Skantz, T. R., Cloninger, D. O., and Strickland, T. H. (1990). Price-fixing and shareholder returns: an empirical study. Financial Review 25, 153-164.
- Sirri, E. and Tufano, P. (1998). Costly search and mutual fund flows, Journal of Finance 53, 1589-1622.
- Tapia, W. (2008). Comparing aggregate investment returns in privately managed pension funds: An initial assessment. OECD Working Papers on Insurance and Private Pensions No. 21. OECD publishing, doi:10.1787/237833258822. Available at: http://www.oecd.org/dataoecd/39/5/41408063.pdf
- Vafeas, N. (2003). Length of board tenure and outside director independence. Journal of Business Finance and Accounting 30, 1043-1064.
- Warner, J. B., Watts R. L., and Wruck, K. H. (1988). Stock prices and top management changes, Journal of Financial Economics 20, 461-492.
- World Bank (1994). Averting the old age crisis. Policies to protect the old and promote growth. New York, NY: Oxford University Press.
- Yermack, D. (1996). Higher market valuation of companies with a small board of directors. Journal of Financial Economics 40(2), 185-211.