Political Representation and Governance: Evidence from the Investment Decisions of Public Pension Funds

Aleksandar Andonov, Y V Hochberg, J D Rauh

Research output: Contribution to journalArticleAcademicpeer-review

51 Citations (Scopus)
2 Downloads (Pure)

Abstract

Representation on pension fund boards by state officials—often determined by statute decades past—is negatively related to the performance of private equity investments made by the pension fund, despite state officials’ relatively strong financial education and experience. Their underperformance appears to be partly driven by poor investment decisions consistent with political expediency, and is also positively related to political contributions from the finance industry. Boards dominated by elected rank-and-file plan participants also underperform, but to a smaller extent and attributable to lesser financial experience.
Original languageEnglish
Pages (from-to)2041-2086
Number of pages46
JournalThe Journal of Finance
Volume73
Issue number5
DOIs
Publication statusPublished - 2018

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