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Pension plan risk-taking: does it matter if the sponsor is publicly-traded?

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  • ATANASOVA, CHRISTINA
  • GATEV, EVAN

Abstract

We use a large sample of defined benefit (DB) pension plans to document economically significant differences in the risk-taking of plans sponsored by privately-held versus publicly-traded firms. The magnitude and the main determinants of pension plan risk-taking are different for public and private firms. The effect of pension liabilities’ funded status on risk-taking is two and a half times higher for plans with publicly-traded sponsors than for plans with private sponsors. In contrast, changing sponsor contributions has more than four times higher effect on risk-taking for plans with private sponsors. The results suggest that the alignment of incentives for the stakeholders in a pension contract is different for plans sponsored by private versus publicly-traded firms.

Suggested Citation

  • Atanasova, Christina & Gatev, Evan, 2013. "Pension plan risk-taking: does it matter if the sponsor is publicly-traded?," Journal of Pension Economics and Finance, Cambridge University Press, vol. 12(2), pages 218-249, April.
    • Handle: RePEc:cup:jpenef:v:12:y:2013:i:02:p:218-249_00
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    Cited by:

    1. Platanakis, Emmanouil & Sutcliffe, Charles, 2016. "Pension scheme redesign and wealth redistribution between the members and sponsor: The USS rule change in October 2011," Insurance: Mathematics and Economics, Elsevier, vol. 69(C), pages 14-28.

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