| The Role of Governance in Retirement Investments: Evidence from Variable Annuities |
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WP#2007-20 AbstractWe study the relative importance of market governance and non-market governance in retirement investments using a sample of variable annuities. Variable annuity investors are significantly less sensitive to performance and fees than mutual fund investors. Consistent with a complementary role of market and non-market governance, other governance mechanisms play a stronger role for variable annuity funds. Variable annuity sponsors add alternative investment options and replace advisors on behalf of their investors after poor performance and high fees. These other governance mechanisms are ineffective, however, whenever conflicts of interest exist between variable annuity sponsors and fund advisors. For full paper in PDF
Richard Evans is an assistant professor at the Darden School of Business at the University of Virginia. Rüdiger Fahlenbrach is an assistant professor of finance at the Fisher College of Business at the Ohio State University.
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