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Portrait Of A Company: Defined Benefit Pension Plan Sponsors

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  • Karen C. Castro-González

Abstract

This study describes firms that sponsor defined benefit pension plans (DBPP) based on firm specific characteristics, financial and operating performance. Firms are classified into portfolios based on their funding levels and described accordingly. The results suggest that firms in the most underfunded portfolio are on average smaller and value firms, with negative stock returns, poor financial and operating performance, lower profitability, invest smaller amounts in advertising, research and development and capital assets and are more indebted with higher probabilities of bankruptcy. The opposite is seen for the least and overfunded firms. The portrayal of these characteristics can help regulators in the effective identification of firms that may confront funding problems before it is too late. The detection of risk behavior or tendencies in terms of firm characteristics can help regulators in establishing policies to decelerate and improve pension plan funding levels and to protect the public interest.

Suggested Citation

  • Karen C. Castro-González, 2012. "Portrait Of A Company: Defined Benefit Pension Plan Sponsors," Accounting & Taxation, The Institute for Business and Finance Research, vol. 4(1), pages 43-52.
  • Handle: RePEc:ibf:acttax:v:4:y:2012:i:1:p:43-52
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Defined benefit; pension plans; pension management; pension regulation;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

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