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Pension fund finance and sponsoring companies*

Published online by Cambridge University Press:  17 February 2012

E. PHILIP DAVIS  and
LEO DE HAAN
E. PHILIP DAVIS
Affiliation:
NIESR, Dean Trench Street, London SW1 (e-mail: e_philip_davis@msn.com)
LEO DE HAAN
Affiliation:
De Nederlandsche Bank, Economics and Research Division, Amsterdam, The Netherlands (e-mail: l.de.haan@dnb.nl)
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Abstract

We present empirical evidence on the funding and portfolio allocation of around 200 Dutch corporate pension funds over the period 1996-2005, with a special focus on the influence of the sponsoring firm. We find that unprofitable and small firms contribute less to their pension funds than profitable and large firms, consistent with theories of capital market imperfections. Sponsor contributions are found to be positively correlated with leverage, suggesting that tax effects play a role. Defined benefit funds invest relatively more in equity and less in bonds than their defined contribution counterparts, which is in accordance with the risk shifting theory.

Keywords

G23G32Pension fundssponsoring companycapital structureasset allocation
Type
Articles
Information
Journal of Pension Economics & Finance , Volume 11 , Issue 3 , July 2012 , pp. 439 - 463
Copyright
Copyright © Cambridge University Press 2012

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