Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
10475746 | Journal of Financial Economics | 2016 | 52 Pages |
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.
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Business, Management and Accounting
Accounting
Authors
Daniel Bradley, Christos Pantzalis, Xiaojing Yuan,