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Institutional Investor Ownership and Corporate Pension Transparency

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  • Tim V. Eaton
  • John R. Nofsinger
  • Abhishek Varma

Abstract

type="main"> We examine the association between institutional ownership and defined benefit (DB) pension decisions. We find that institutional ownership is negatively associated with pension underfunding, opportunistic increases in the expected rate of return assumption in the presence of underfunding, and significant ownership of the firm's own stock in the DB plan portfolio. Furthermore, these relations are stronger when institutional ownership is concentrated, when institutions are nontransient investors, or when institutions are relatively large. These results suggest that institutional investors are monitoring firm pension decisions, particularly those institutions with stronger monitoring incentives or resources.

Suggested Citation

  • Tim V. Eaton & John R. Nofsinger & Abhishek Varma, 2014. "Institutional Investor Ownership and Corporate Pension Transparency," Financial Management, Financial Management Association International, vol. 43(3), pages 603-630, September.
    • Handle: RePEc:bla:finmgt:v:43:y:2014:i:3:p:603-630
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    File URL: http://hdl.handle.net/10.1111/fima.12045
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    References listed on IDEAS

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