Paper by fellow Aleksandar Andonov forthcoming in the Journal of Finance

Representation on pension fund boards by state officials — often determined by statute decades past — is negatively related to the performance of private equity investments made by the pension fund, despite state officials’ relatively strong financial education and experience. Their underperformance appears to be partly driven by poor investment decisions consistent with political expediency, and is also positively related to political contributions from the finance industry. Boards dominated by elected rank-and-file plan participants also underperform, but to a smaller extent and attributable to lesser financial experience.