Title
What Drives Corporate Pension Plan Contributions: Moral Hazard or Tax Benefits?
Document Type
Article
Publication Date
7-2013
Publication Source
Financial Analysts Journal
Abstract
In testing moral hazard and tax benefit hypotheses regarding defined benefit plan funding and contribution incentives by incorporating sponsors’ bankruptcy risk, the authors proposed that high-bankruptcy-risk sponsors have a strong moral hazard incentive because the put value of the U.S. Pension Benefit Guaranty Corporation guarantee is high. For low-bankruptcy-risk sponsors, the put value is low; maximizing tax benefits associated with pension contributions becomes a powerful incentive. Results based on sponsors’ voluntary contributions support both hypotheses.
Inclusive pages
58-72
ISBN/ISSN
0015-198X
Copyright
Copyright © 2013, Chartered Financial Analyst Institute
Publisher
Chartered Financial Analyst Institute
Volume
69
Peer Reviewed
yes
Issue
4
eCommons Citation
Chen, Xuanjuan; Yu, Tong; and Zhang, Ting, "What Drives Corporate Pension Plan Contributions: Moral Hazard or Tax Benefits?" (2013). Economics and Finance Faculty Publications. 38.
https://ecommons.udayton.edu/eco_fac_pub/38
COinS
Comments
Permission documentation is on file.