IDEAS home Printed from https://ideas.repec.org/a/bla/rmgtin/v5y2002i1p1-20.html
   My bibliography  Save this article

The Role of Company Stock in 401(k) Plans

Author

Listed:
  • Jack L. VanDerhei

Abstract

The Enron situation has caused the retirement income policy community to focus increased attention on the desirability of current law and practices regarding company stock in 401(k) plans. Several proposals have been advanced to limit the exposure of 401(k) participants to company stock. I suggest that, contrary to conventional wisdom, the introduction of company stock into 401(k) plans is not simply more risk for no additional (expected) return. Rather, the introduction of this asset class into the 401(k) participant's portfolio may have beneficial influences via the differential asset allocation. I create a model to simulate the likely financial impact of prospectively eliminating company stock from 401(k) plans and find that average balances are expected to be between 4.0 and 7.8 percent larger if company stock is retained.

Suggested Citation

  • Jack L. VanDerhei, 2002. "The Role of Company Stock in 401(k) Plans," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 5(1), pages 1-20, September.
    • Handle: RePEc:bla:rmgtin:v:5:y:2002:i:1:p:1-20
    DOI: 1098-1616.00007
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/1098-1616.00007
    Download Restriction: no
    File URL: https://libkey.io/1098-1616.00007?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Jack VanDerhei & Craig Copeland, 2001. "A Behavioral Model for Predicting Employee Contributions to 401(k) Plans," North American Actuarial Journal, Taylor & Francis Journals, vol. 5(1), pages 80-94.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Brown, Jeffrey R. & Liang, Nellie & Weisbenner, Scott, 2006. "401(k) matching contributions in company stock: Costs and benefits for firms and workers," Journal of Public Economics, Elsevier, vol. 90(6-7), pages 1315-1346, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.

      More about this item

      Statistics

      Access and download statistics

      Corrections

      All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:rmgtin:v:5:y:2002:i:1:p:1-20. See general information about how to correct material in RePEc.

      If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

      If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

      If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

      For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=1098-1616 .

      Please note that corrections may take a couple of weeks to filter through the various RePEc services.

      IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.