Skip to main content


Is Governance Related to Investment Performance and Asset Allocation? Empirical Evidence from Swiss Pension Funds

  • 757 Accesses

  • 1 Citations


This study investigates the relationship between governance, investment performance and asset allocation of pension funds in Switzerland. Our sample includes survey data from 139 Swiss occupational pension plans for which we develop a governance metric comprising attributes of organisational design, management incentives, target setting, investment strategy, investment processes, risk management, monitoring, and transparency. We find empirical evidence that pension fund governance is positively related to excess returns, benchmark outperformance and Sharpe ratios. Pension funds in the top governance quartile outperform those in the bottom quartile by approximately 1% in terms of average excess returns and benchmark deviation. Furthermore, our study results indicate that asset allocation decisions are not related to governance, but rather to institutional factors.


  1. Albrecht, W., Shamshub, H., and Giannatasio, N. A. (2007), “Public Pension Fund Governance Practices and Financial Performance”, Journal of Public Budgeting, Accounting & Financial Management, 19(2), pp. 245–267.

  2. Ambachtsheer, K. P., Capelle, R., and Lum, H. (2008), “The Pension Governance Deficit: Still with Us”, Rotman International Journal of Pension Management, 1(1), pp. 14–21.

  3. Ambachtsheer, K. P., Capelle, R., and Scheibelhut, T. (1998), “Improving Pension Fund Performance”, Financial Analysts Journal, 54(6), pp. 15–21

  4. Ambachtsheer, K. P., and Ezra, D. D. (1998), Pension Fund Excellence: Creating Value for Shareholders, New York: John Wiley & Sons.

  5. Ammann, M., Oesch, D., and Schmid, M. (2011), “Corporate Governance and Firm Valuation: International Evidence”, Journal of Empirical Finance, 18, pp. 36–55.

  6. Ammann, M., Oesch, D., and Schmid, M. (2013), “Product Market Competition, Corporate Governance, and Firm Value: Evidence from the EU-Area”, European Financial Management, 19(3), pp. 209–250.

  7. Ammann, M., and Zingg, A. (2010), “Performance and Governance of Swiss Pension Funds”, Journal of Pension Economics and Finance, 9(1), pp. 95–128.

  8. Andonov, A., Bauer, R., and Cremers, M. (2011), “Can Large Pension Funds Beat the Market? Asset Allocation, Market Timing, Security Selection and the Limits of Liquidity”, Maastricht and Yale University Working Paper.

  9. Bebchuk, L., and Cohen, A. (2005), “The Costs of Entrenched Boards”, Journal of Financial Economics, 78, pp. 409–433.

  10. Bebchuk, L., Cohen, A., and Ferrell, A. (2008), “What Matters in Corporate Governance?”, Review of Financial Studies, 22(2), pp. 783–827.

  11. Blake, D., Lehmann, B. N., and Timmermann, A. (1999), “Asset Allocation Dynamics and Pension Fund Performance”, Journal of Business, 72(4), pp. 429–461.

  12. Blake, D., Timmermann, A., ROSSI, A. G., TONKS, I., and WERMERS, R. (2013), “Decentralized Investment Management: Evidence from the Pension Fund Industry”, Journal of Finance, 68(3), pp. 1133–1178.

  13. Brown, L. D., and Caylor, M. L. (2006), “Corporate Governance and Firm Valuation”, Journal of Accounting and Public Policy, 25, pp. 409–434.

  14. Clapman, P. (2007), “Committee on Fund Governance - Best Practice Principles”, Discussion Paper at the Stanford Institutional Investors’ Forum.

  15. Clark, G. L. (2004), “Pension Fund Governance: Expertise and Organisational Form”, Journal of Pension Economics and Finance, 3(2), pp.233–253.

  16. Clark, G. L. (2007), “Expertise and Representation in Financial Institutions: UK Legislation on Pension Fund Governance and US Regulation of the Mutual Fund Industry”, 21st Century Society: Journal of the Academy of Social Sciences, 2(1), pp. 1–24.

  17. Clark, G. L., Caerlewy-Smith, E., and Marshall, J. C. (2006), “Pension Fund Trustee Competence: Decision-Making in Problems Relevant to Investment Practice”, Journal of Pension Economics and Finance, 5(1), pp. 91–110.

  18. Clark, G. L., and Urwin, R. (2008), “Best-Practice Pension Fund Governance”, Journal of Asset Management, 9(1), pp. 2–21.

  19. Clark, G. L., and Urwin, R. (2010), “Innovative Models of Pension Fund Governance in the Context of the Global Financial Crisis”, Pensions, 15(1), pp. 62–77.

  20. Gompers, P., Ishii, J., and Metrick, A. (2003), “Corporate Governance and Equity Prices”, The Quarterly Journal of Economics, 118(1), pp. 107–155.

  21. Goyal, A., and Wahal, S. (2008), “The Selection and Termination of Investment Management Firms by Plan Sponsors”, Journal of Finance, 63(4), pp. 1805–1847.

  22. Hess, D. (2005), “Protecting and Politicizing Public Pension Fund Assets: Empirical Evidence on the Effects of Governance Structures and Practices”, University of California, Davis Law Review, 39, pp. 187–227.

  23. Harper, J. T. (2008), “Public Sector Pension Governance in the United States: Up to the Task?”, Rotman International Journal of Pension Management, 1(1), pp. 22–28.

  24. Impavido, G. (2002), “On the Governance of Public Pension Fund Management”, World Bank Policy Research Working Paper Series 2878.

  25. Jackowicz, K., and Kowalewski, O. (2012), “Crisis, Internal Governance Mechanisms and Pension Fund Performance. Evidence from Poland”, Emerging Markets Review, 13(1), pp. 493–515.

  26. Jensen, M. C. (1986), “The Performance of Mutual Funds in the Period 1945–1964”, Journal of Finance, 23(1968), pp. 389–416.

  27. Jensen, M. C. (1993), “The Modern Industrial Revolution, Exit, and the Failure of Internal Control Systems”, Journal of Finance, 48(3), pp. 831–880.

  28. Kanagaretnam, K., Lobo, J., and Whalen, J. (2007), “Does Good Corporate Governance Reduce Information Asymmetry Around Quarterly Earnings Announcements?”, Journal of Accounting and Public Policy, 26(4), pp. 497–522.

  29. Lipton, M., and Lorsch, J. W. (1992), “A Modest Proposal for Improved Corporate Governance”, Business Lawyer, 48(1), pp. 59–77

  30. Mitchell, O. S., and Hsin, P.-L. (1997), “Public Sector Pension Governance and Performance”, in The Economics of Pensions: Principles, Policies, and International Experience, S. Valdés-Prieto, ed., pp. 92–126, Cambridge: Cambridge University Press.

  31. OECD (2006), “OECD Guidelines on Pension Fund Asset Management”, OECD Policy Guidelines.

  32. OECD (2011), “OECD/IOPS Good Practices for Pension Funds’ Risk Management Systems”, OECD Policy Guidelines.

  33. OECD (2009), “OECD Guidelines on Pension Fund Governance”, OECD Policy Guidelines.

  34. SWISS FEDERAL STATISTICAL OFFICE (2015), “Results of the Pension Fund Statistic”, BFS Website.

  35. SWISS FEDERAL STATISTICAL OFFICE (2014), Die berufliche Vorsorge in der Schweiz - Kennzahlen der Pensionskassenstatistik 2006–2012, Neuchâtel: Bundesamt für Statistik.

  36. Wright, M., Siegel, D. S., Keasey, K., and Filatotchev, I. (2013), The Oxford Handbook of Corporate Governance, Oxford: Oxford University Press.

  37. Yang, T., and Mitchell, O. S. (2008). “Public Pension Governance, Funding, and Performance: A Longitudinal Appraisal”, in Pension Fund Governance: A Global Perspective, J. Evans & J. Piggot, eds., pp. 179–199, London: Edward Elgar.

  38. Yermo, F., and Stewart, J. (2008), “Pension Fund Governance - Challenges and Potential Solutions”, OECD Working Papers on Insurance and Private Pensions No. 18.

Download references

Author information

Correspondence to Manuel Ammann.

Additional information

We would like to thank Andreas Zingg, Christian Gast, Christian Obrist, Kristian Blickle, Hanspeter Konrad and the Swiss Pension Fund Association (ASIP) for their support and their helpful comments. Blackrock Asset Management Switzerland AG is gratefully acknowledged for financing the pension fund survey.

Rights and permissions

Reprints and Permissions

About this article

Verify currency and authenticity via CrossMark

Cite this article

Ammann, M., Ehmann, C. Is Governance Related to Investment Performance and Asset Allocation? Empirical Evidence from Swiss Pension Funds. Swiss J Economics Statistics 153, 293–339 (2017).

Download citation


  • G11
  • G19
  • G23
  • J32


  • pension fund governance
  • investment performance
  • Swiss occupational pension plans