We identify and test motives for corporate pension asset allocations using a proprietary asset allocation database covering the 1988-1994 period. We focus on the question whether the recognition of additional minimum pension liability in accordance with SFAS No. 87 affects asset allocation. The results indicate that firms allocate their pension assets to avoid the recognition of an additional minimum liability. In particular, firms with a relatively high probability of recognizing an additional minimum liability prefer fixed income investments rather than equity investments.
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Paper provided by Columbia - Graduate School of Business in its series Papers with number
97-11.