Defined-benefit pension plan funding: does managerial ability matter?
Defined-benefit pension plan funding: does managerial ability matter?
We examine the impact of managerial ability on defined-benefit pension plans in US firms and find that plan funding levels increase with their sponsors' managerial ability. The finding is robust to various model specifications and control for endogeneity. Further analyses show that high-ability managers make higher employer contributions and adopt more conservative and prudent plan assumptions and investment strategies, and that their pension management is value-enhancing. We conclude that more able managers are cognisant of obligations toward pension beneficiaries and fulfil such obligations with better-funded plans, which ultimately benefits shareholders.
defined-benefit pension plans, employer contributions, funding levels, managerial ability, plan assumptions, plan investment strategies
Jory, Surendranath Rakesh
2624eb24-850a-48f6-b3c6-c96749b87322
Ngo, Thanh
852ea7b9-fd74-4a39-9281-87626e50886b
Wang, Hongxia
d2fef2a2-9988-4d17-bd78-0d9107d0d054
Jory, Surendranath Rakesh
2624eb24-850a-48f6-b3c6-c96749b87322
Ngo, Thanh
852ea7b9-fd74-4a39-9281-87626e50886b
Wang, Hongxia
d2fef2a2-9988-4d17-bd78-0d9107d0d054
Jory, Surendranath Rakesh, Ngo, Thanh and Wang, Hongxia
(2024)
Defined-benefit pension plan funding: does managerial ability matter?
Accounting and Finance.
(doi:10.1111/acfi.13375).
Abstract
We examine the impact of managerial ability on defined-benefit pension plans in US firms and find that plan funding levels increase with their sponsors' managerial ability. The finding is robust to various model specifications and control for endogeneity. Further analyses show that high-ability managers make higher employer contributions and adopt more conservative and prudent plan assumptions and investment strategies, and that their pension management is value-enhancing. We conclude that more able managers are cognisant of obligations toward pension beneficiaries and fulfil such obligations with better-funded plans, which ultimately benefits shareholders.
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Accounting Finance - 2024 - Jory - Defined‐benefit pension plan funding Does managerial ability matter
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e-pub ahead of print date: 16 December 2024
Keywords:
defined-benefit pension plans, employer contributions, funding levels, managerial ability, plan assumptions, plan investment strategies
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Local EPrints ID: 499914
URI: http://eprints.soton.ac.uk/id/eprint/499914
ISSN: 0810-5391
PURE UUID: 0cef74c9-4eb2-44f7-abe3-0f1d5344a44c
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Date deposited: 08 Apr 2025 16:43
Last modified: 22 Aug 2025 02:08
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Author:
Thanh Ngo
Author:
Hongxia Wang
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