Economics of Governance

, Volume 19, Issue 1, pp 51–73 | Cite as

The impact of public pension board of trustee composition on state bond ratings

  • John A. Dove
  • Courtney A. Collins
  • Daniel J. Smith
Original Paper


The declining financial health of public pension systems is increasingly becoming a budgetary concern for many state and local governments. While the academic literature has identified several factors behind the growth in unfunded state and local public pension liabilities, there is mixed evidence on how the composition of a pension system’s board of trustees affects a pension’s financial health. This article contributes to this literature by measuring how public pension board composition affects fund financial health as measured by state bond ratings. With a panel dataset of state pensions between 2001 and 2014 our results indicate that elected board members are consistently associated with lower bond ratings (and thus higher borrowing costs) while appointed and ex-officio board members are associated with higher bond ratings. These results are robust to a number of specifications.


Unfunded liabilities Public pensions Pension governance Board of directors Bond ratings Public finance Corporate governance 

JEL Classification

D78 G32 H75 L22 


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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2018

Authors and Affiliations

  • John A. Dove
    • 1
  • Courtney A. Collins
    • 2
  • Daniel J. Smith
    • 1
  1. 1.Manuel H. Johnson Center for Political EconomyTroy UniversityTroyUSA
  2. 2.Department of EconomicsRhodes CollegeMemphisUSA

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