Crisis, internal governance mechanisms and pension fund performance: Evidence from Poland

This study provides new insight on the impact of supervisory board structure as an internal governance mechanism on privately defined contribution pension fund performance in Poland. Using a hand-collected data set, we find evidence that the chairman, as a motivated insider, plays an important role in determining fund performance. The results also show, although with weaker evidence, that outsiders may positively impact fund performance. During the 2007-2008 crisis, however, the insider professional knowledge outweighed the benefits of having motivated outsiders on the supervisory board. Consequently, the results show that both the composition of the supervisory board and the motivation and knowledge of its members are important in explaining pension fund performance. We also find that other governance factors have no impact on fund performance. The results are a relevant contribution to the current regulatory debate on reforms of the pension fund industry in Poland, arguing that modifying the supervisory board structure and electing outsiders with professional knowledge may significantly improve its performance.