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Mitigating risk-shifting in corporate pension plans: Evidence from stakeholder constituency statutes

Author

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  • Garman, Amy D.
  • Kubick, Thomas R.

Abstract

We use staggered enactments of state stakeholder constituency laws as a natural experiment to examine the effect of such laws on corporate pension risk shifting. Our analysis encompasses three components of pension risk shifting: funding risk, investment risk, and benefit risk. We observe a reduction in all three elements of pension risk shifting following the enactment of stakeholder orientation laws that promote greater consideration of stakeholder interests. We also find that the post-enactment reduction in pension risk-shifting is greater for firms with fewer investment opportunities. Overall, our results provide insight into how stakeholder constituency can mitigate an important form of risk-shifting.

Suggested Citation

  • Garman, Amy D. & Kubick, Thomas R., 2025. "Mitigating risk-shifting in corporate pension plans: Evidence from stakeholder constituency statutes," Journal of Accounting and Economics, Elsevier, vol. 79(1).
    • Handle: RePEc:eee:jaecon:v:79:y:2025:i:1:s016541012400034x
    DOI: 10.1016/j.jacceco.2024.101704
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    Keywords

    Agency theory; Defined benefit pensions; Manager-employee conflicts; Pensions; Stakeholder constituency statutes; State law; Risk shifting;
    All these keywords.

    JEL classification:

    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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