CEO incentives and the health of defined benefit pension plans

Joy Begley (), Sandra Chamberlain, Shuo Yang and Jenny Li Zhang
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Joy Begley: University of British Columbia
Sandra Chamberlain: University of British Columbia
Shuo Yang: Hong Kong Polytechnic University
Jenny Li Zhang: University of British Columbia

Review of Accounting Studies, 2015, vol. 20, issue 3, No 1, 1013-1058

Abstract: Abstract We examine the relation between CEO pay-related wealth and the funding levels, and freezing decisions, of defined benefit pension plans. Results show that higher funding levels occur when CEOs are most endowed in employee pension plans, but that spillover endowments in supplemental executive plans coincide with the lowest funding levels. CEO equity-wealth correlates with funding health in between the extremes. Further, “hard freezes” of employee plans are less likely, the larger the CEO’s total pension interest (in executive and employee plans together). This suggests that CEOs fear repercussions to their own pension plan when employee plans are frozen.

Keywords: Defined benefit plans; Earnings management; Pension plan governance (search for similar items in EconPapers)
JEL-codes: G32 J32 M12 M41 (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1007/s11142-015-9332-0

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