Determinants of Defined-Contribution Japanese Corporate Pension Coverage
Following the collapse of the Japanese financial bubble during the 1990s, Japanese corporations came to be saddled with increasingly large underfunded pension obligations. The gap between the level of retirement benefit promised and the market performance of retirement funds widened alarmingly, adding to the sense of corporate financial malaise during the “lost decade” that followed the market collapse. Partly in response, the passage of new corporate pension legislations in 2001 introduced the so-called defined-contribution pension plans whereby corporations were allowed to establish retirement plans on behalf of their employees on a voluntary basis whereby the terms of the retirement benefit were no longer defined in advance as in the traditional plans, but instead were conditioned on the actual performance of managed retirement funds. Only the periodic premium contributions to the plan during the employee’s active working life were now defined. This paper investigates the empirical determinants of the Japanese corporate decision to newly adopt the defined-contribution (DC) pension plans. Among the key findings of the paper are that the likelihood of adopting a new DC plan increases with an increase in the size of the firm, and that it decreases with an increase in the extent of underfunding of the firm’s existing defined-benefit (DB) pension plan, in sharp contrast to the American corporate incidence of DC pension.
Volume (Year): 2 (2012)
Issue (Month): (December)
|Contact details of provider:|| Postal: Rokkodai 2-1, Nada, Kobe 657-8501|
Phone: +81-(0)78 803 7036
Web page: http://www.rieb.kobe-u.ac.jp/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Francesco Franzoni & J. M. Marin, 2006.
"Pension Plan Funding and Stock Market Efficiency,"
- Thomas, Jacob K., 1989. "Why do firms terminate their overfunded pension plans?," Journal of Accounting and Economics, Elsevier, vol. 11(4), pages 361-398, November.
- Mark Spiegel & Nobuyoshi Yamori, 2003.
"Financial Turbulence and the Japanese Main Bank Relationship,"
Journal of Financial Services Research,
Springer;Western Finance Association, vol. 23(3), pages 205-223, June.
- Spiegel, M.M. & Yamori, N., 2000. "Financial Turbulence and the Japanese Main Bank Relationship," Papers pb00-04, Economisch Institut voor het Midden en Kleinbedrijf-.
- Horiba, Yutaka & Yoshida, Kazuo, 2002. "Determinants of Japanese corporate pension coverage," Journal of Economics and Business, Elsevier, vol. 54(5), pages 537-555.
- Kazuo Yoshida & Yutaka Horiba, 2003. "Japanese Corporate Pension Plans and the Impact on Stock Prices," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 70(2), pages 249-268.
- Mittelstaedt, H. Fred, 1989. "An empirical analysis of the factors underlying the decision to remove excess assets from overfunded pension plans," Journal of Accounting and Economics, Elsevier, vol. 11(4), pages 399-418, November.
- Myers, Stewart C. & Majluf, Nicholas S., 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Journal of Financial Economics, Elsevier, vol. 13(2), pages 187-221, June.
- Stone, Mary, 1991. "Firm financial stress and pension plan continuation/replacement decisions," Journal of Accounting and Public Policy, Elsevier, vol. 10(3), pages 175-206.
- Lazear, Edward P, 1979. "Why Is There Mandatory Retirement?," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1261-84, December.
- Stulz, ReneM., 1990. "Managerial discretion and optimal financing policies," Journal of Financial Economics, Elsevier, vol. 26(1), pages 3-27, July.
- Ippolito, Richard A, 1985. "The Labor Contract and True Economic Pension Liabilities," American Economic Review, American Economic Association, vol. 75(5), pages 1031-43, December.
- Williamson, Oliver E, 1988. " Corporate Finance and Corporate Governance," Journal of Finance, American Finance Association, vol. 43(3), pages 567-91, July.
- Daniel Bergstresser & Mihir Desai & Joshua Rauh, 2006. "Earnings Manipulation, Pension Assumptions, and Managerial Investment Decisions," The Quarterly Journal of Economics, Oxford University Press, vol. 121(1), pages 157-195.
- Takeo Hoshi & Anil K. Kashyap & David Scharfstein, 1989.
"Corporate structure, liquidity, and investment: evidence from Japanese industrial groups,"
Finance and Economics Discussion Series
82, Board of Governors of the Federal Reserve System (U.S.).
- Takeo Hoshi & Anil Kashyap & David Scharfstein, 1991. "Corporate Structure, Liquidity, and Investment: Evidence from Japanese Industrial Groups," The Quarterly Journal of Economics, Oxford University Press, vol. 106(1), pages 33-60.
- Ippolito, Richard A, 1985. "The Economic Function of Underfunded Pension Plans," Journal of Law and Economics, University of Chicago Press, vol. 28(3), pages 611-51, October.
- Friend, Irwin & Lang, Larry H P, 1988. " An Empirical Test of the Impact of Managerial Self-interest on Corporate Capital Structure," Journal of Finance, American Finance Association, vol. 43(2), pages 271-81, June.
- Martin Feldstein & Stephanie Seligman, 1980.
"Pension Funding, Share Prices, and National Saving,"
NBER Working Papers
0509, National Bureau of Economic Research, Inc.
- Feldstein, Martin & Seligman, Stephanie, 1981. "Pension Funding, Share Prices, and National Savings," Journal of Finance, American Finance Association, vol. 36(4), pages 801-24, September.
- Stewart C. Myers & Nicholas S. Majluf, 1984. "Corporate Financing and Investment Decisions When Firms Have InformationThat Investors Do Not Have," NBER Working Papers 1396, National Bureau of Economic Research, Inc.
- Myers, Stewart C. & Majluf, Nicolás S., 1945-, 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Working papers 1523-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Leslie E. Papke, 1999.
"Are 401(k) Plans Replacing Other Employer-Provided Pensions? Evidence from Panel Data,"
Journal of Human Resources,
University of Wisconsin Press, vol. 34(2), pages 346-368.
- Leslie E. Papke, 1996. "Are 401(k) Plans Replacing Other Employer-Provided Pensions? Evidence from Panel Data," NBER Working Papers 5736, National Bureau of Economic Research, Inc.
- Kee-Hong Bae & Takeshi Yamada & Keiichi Ito, 2006. "How do Individual, Institutional, and Foreign Investors Win and Lose in Equity Trades? Evidence from Japan-super-," International Review of Finance, International Review of Finance Ltd., vol. 6(3-4), pages 129-155.
- Harris, Milton & Raviv, Artur, 1990. " Capital Structure and the Informational Role of Debt," Journal of Finance, American Finance Association, vol. 45(2), pages 321-49, June.
- Dorsey, Stuart, 1987. "The Economic Functions of Private Pensions: An Empirical Analysis," Journal of Labor Economics, University of Chicago Press, vol. 5(4), pages S171-89, October.
When requesting a correction, please mention this item's handle: RePEc:kob:tjrevi:dec2012:v:2:p:33-47. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (TJAR Editorial Office)
If references are entirely missing, you can add them using this form.