Institutional Investor Ownership and Corporate Pension Transparency

Financial Management, Forthcoming

Posted: 7 Aug 2014

See all articles by Timothy Eaton

Timothy Eaton

Miami University of Ohio - Department of Accountancy

John R. Nofsinger

University of Alaska Anchorage

Abhishek Varma

Illinois State University

Date Written: August 5, 2014

Abstract

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

Eaton, Timothy and Nofsinger, John R. and Varma, Abhishek, Institutional Investor Ownership and Corporate Pension Transparency (August 5, 2014). Financial Management, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2476507

Timothy Eaton

Miami University of Ohio - Department of Accountancy ( email )

310 Laws Hall
Oxford, OH 45056-1675
United States

John R. Nofsinger

University of Alaska Anchorage ( email )

3211 Providence Drive
Anchorage, AK 99508
United States

HOME PAGE: http://faculty.cbpp.uaa.alaska.edu/jnofsinger/

Abhishek Varma (Contact Author)

Illinois State University ( email )

Normal, IL 61790
United States
309-438-5658 (Phone)

HOME PAGE: http://sites.google.com/site/abvarma

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