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Pension fund finance and sponsoring companies

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  • DAVIS, E. PHILIP
  • DE HAAN, LEO

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.

Suggested Citation

  • Davis, E. Philip & De Haan, Leo, 2012. "Pension fund finance and sponsoring companies," Journal of Pension Economics and Finance, Cambridge University Press, vol. 11(3), pages 439-463, July.
    • Handle: RePEc:cup:jpenef:v:11:y:2012:i:03:p:439-463_00
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    Cited by:

    1. De Haan, Leo, 2018. "Recovery measures of underfunded pension funds: higher contributions, no indexation or pension cuts?," Journal of Pension Economics and Finance, Cambridge University Press, vol. 17(4), pages 437-468, October.
    2. José Luis Iparraguirre, 2020. "Economics and Ageing," Springer Books, Springer, number 978-3-030-29019-1, June.
    3. Hasa, Sidita & Salva, Carolina, 2024. "Cash holdings in pension funds," Journal of Banking & Finance, Elsevier, vol. 161(C).
    4. Laurens Defau & Lieven De Moor, 2018. "The impact of plan and sponsor characteristics on pension funds’ asset allocation and currency diversification," Journal of Asset Management, Palgrave Macmillan, vol. 19(1), pages 27-37, January.
    5. Laurens Defau & Lieven De Moor, 2021. "The investment behaviour of pension funds in alternative assets: Interest rates and portfolio diversification," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(1), pages 1424-1434, January.
    6. Yu Mei & Xie Haibin & Huang Xiaowei & Xu Jinhai & Ralescu Dan, 2014. "A Study on the Chinese Enterprise Annuity Replacement Rate Problem," Journal of Systems Science and Information, De Gruyter, vol. 2(1), pages 1-15, February.

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