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The effect of board composition on public sector pension funding

Gang Chen (State University of New York)
Kenneth Kriz (Wichita State University)
Carol Ebdon (University of Nebraska at Omaha)

Journal of Public Budgeting, Accounting & Financial Management

ISSN: 1096-3367

Article publication date: 1 March 2015

Abstract

Public pension plans in the U.S. are seriously underfunded, especially following the financial market crisis of 2008-2009 which resulted in large investment losses. However, funding levels vary widely across plans. Pension boards of trustees make key management decisions in pension systems and these decisions have significant effects on funded levels, yet our empirical knowledge of board management is limited. This study explores the effect of board composition on pension funding levels. Existing theoretical debates lead to differing expectations, and previous studies have mixed results. Our research uses a panel data set of large public pension plans from 2001-2009. We also collect data for pension board composition from this time period. We find that increasing political appointees and employee members on the board increases the funding performance of the pension system.

Citation

Chen, G., Kriz, K. and Ebdon, C. (2015), "The effect of board composition on public sector pension funding", Journal of Public Budgeting, Accounting & Financial Management, Vol. 27 No. 3, pp. 352-376. https://doi.org/10.1108/JPBAFM-27-03-2015-B003

Publisher

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Emerald Publishing Limited

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