Journal of Financial Economics Vol. 119 No. 1 2016
The influence of political bias in state pension funds
Abstract
Using a sample of state pension funds’ equity holdings, we find evidence of not only local bias, but also bias towards politically-connected stocks. Political bias is detrimental to fund performance. State pension funds have longer holding durations of politically-connected local firms and display disposition behavior in these positions. Political bias is positively related to the percentage of politically-affiliated trustees on the board and Congressional connections. The more politically-affiliated trustees on the board, the more the fund shifts toward risky asset allocations. Overall, our results imply that political bias is likely costly to taxpayers and pension beneficiaries.
- DOI
- 10.1016/j.jfineco.2015.08.017
- Volume
- 119
- Issue
- 1
- Pages
- 69-91
- Language
- en
- Sources
- crossref bibtex:phds-export.bib openalex