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Corporate expenditures and pension contributions: evidence from UK company accounts

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  • Philip Bunn
  • Kamakshya Trivedi

Abstract

This paper examines how corporate behaviour is related to financial pressure, where the financial pressure is on account of pension contributions to the company pension scheme. Using a large panel of quoted non-financial UK firms from 1983-2002, we estimate generalised methods of moments models for dividends and investment. Our results suggest that dividends are reduced in response to higher pension contributions. There is only weak evidence of any impact on investment. Companies that seek to tackle underfunding of defined benefit pension schemes by raising their contributions could pay lower dividends than they would have otherwise.

Suggested Citation

  • Philip Bunn & Kamakshya Trivedi, 2005. "Corporate expenditures and pension contributions: evidence from UK company accounts," Bank of England working papers 276, Bank of England.
  • Handle: RePEc:boe:boeewp:276
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    File URL: http://www.bankofengland.co.uk/research/Documents/workingpapers/2005/WP276.pdf
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    References listed on IDEAS

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    Cited by:

    1. Philip Bunn & Paul Mizen & Pawel Smietanka, 2018. "Growing pension deficits and the expenditure decisions of UK companies," Discussion Papers 2018/05, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
    2. repec:eee:accfor:v:38:y:2014:i:1:p:18-37 is not listed on IDEAS
    3. Parker, Miles, 2006. "Diverging Trends in Aggregate and Firm–Level Volatility in the UK," Discussion Papers 16, Monetary Policy Committee Unit, Bank of England.

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