Agency Costs Beyond Corporations: Evidence from Pension Funds
By Clemens Böhlen
This paper examines the role of agency costs in pension fund performance. Grounded in corporate agency theory, it exploits institutional variation in a unique dataset on the Swiss pension system to assess how differences in monitoring incentives affect investment outcomes. Specifically, I examine the role of the sponsoring company and show that multi-employer funds underperform institutionally comparable single-employer funds by 25-31 basis points per year, in line with weaker governance incentives. Consistent with corporate agency theory, these agency costs decline when pension funds face stronger financial discipline, internal and external monitoring pressure, and better incentive alignment within the fund.
Source SSRN
