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The impact of trustees' age and representation on strategic asset allocations

Author

Listed:
  • Rob Bauer
  • Rien Bogman
  • Matteo Bonetti
  • Dirk Broeders

Abstract

A board of trustees has the fiduciary duty to invest a pension fund's assets in the best interest of its beneficiaries. Trustees'characteristics should not affect their investment decisions. We find two counterfactual artefacts for corporate pension funds. First, a higher average board age lowers the strategic allocation to equity by 7 percentage points after controlling for the pension fund's characteristics. This way the strategic asset allocation does not fully reflect the beneficiaries'characteristics. Second, pension funds with a greater representation of employers on the board allocate more to equities. This fosters a principal-agent problem between employer trustees and beneficiaries.

Suggested Citation

  • Rob Bauer & Rien Bogman & Matteo Bonetti & Dirk Broeders, 2020. "The impact of trustees' age and representation on strategic asset allocations," Working Papers 698, DNB.
    • Handle: RePEc:dnb:dnbwpp:698
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    File URL: https://www.dnb.nl/media/mqgkvsjb/working_paper_698.pdf
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    Cited by:

    1. Rob Bauer & Dirk Broeders & Annick van Ool, 2023. "Walk the green talk? A textual analysis of pension funds’ disclosures of sustainable investing," Working Papers 770, DNB.

    More about this item

    Keywords

    Pension Funds; Asset Allocation; Pension Fund Governance; Agency Problems;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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