Best-practice pension fund governance

Gordon L Clark and Roger Urwin
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Gordon L Clark: Oxford University Centre for the Environment

Journal of Asset Management, 2008, vol. 9, issue 1, No 2, 2-21

Abstract: Abstract Good governance by institutional asset owners makes a significant incremental difference to value creation as measured by their long-term risk-adjusted rate of return. Drawing upon best-practice case studies, it is argued that the principles of good governance can be summarised by organisational coherence, including an institution's clarity of mission and its capacities; people, including who is involved in the investment process, their skills and responsibilities; and process, including how investment decision-making is managed and implemented. Using the case studies to develop the principles and practice of good governance, there are a number of lessons to be learnt from our exemplars whatever the nature, scope and location of the institution — summarised through a set of 12 findings about global best-practice with implications for large and small institutions. Implications are also drawn for the design and management of sovereign funds, which are increasingly important for national welfare in global financial markets. In conclusion, we see the challenge of governance as having two facets: to facilitate adaptation to the functional imperatives of operating in global markets given the heritage of an institution and, over the long-term, to undertake reforms such that institutional form and structure are consistent with the principles developed herein.

Keywords: governance; best-practice; pension funds; investment management (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (9)

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DOI: 10.1057/jam.2008.1

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