Pension plan risk-taking: does it matter if the sponsor is publicly-traded?

Christina Atanasova and Evan Gatev

Journal of Pension Economics and Finance, 2013, vol. 12, issue 2, 218-249

Abstract: We use a large sample of defined benefit (DB) pension plans to document economically significant differences in the risk-taking of plans sponsored by privately-held versus publicly-traded firms. The magnitude and the main determinants of pension plan risk-taking are different for public and private firms. The effect of pension liabilities’ funded status on risk-taking is two and a half times higher for plans with publicly-traded sponsors than for plans with private sponsors. In contrast, changing sponsor contributions has more than four times higher effect on risk-taking for plans with private sponsors. The results suggest that the alignment of incentives for the stakeholders in a pension contract is different for plans sponsored by private versus publicly-traded firms.

Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:cup:jpenef:v:12:y:2013:i:02:p:218-249_00

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