Corporate Pension Funding and Investments: Evidence From Asia Pacific Countries*
Advances in Pacific Basin Business, Economics and Finance
ISBN: 978-1-83753-865-2, eISBN: 978-1-83753-864-5
Publication date: 4 April 2024
Abstract
We study the potential effects of pension underfunding on corporate investment, financial constraints and improved employee bonding using 10 Pacific-Basin countries (including the United States, Australia, and eight Asian countries) at heterogeneous economic development stages and different regulatory environments. We document that corporate pensions are significantly underfunded in most countries of our sample in the period of 2001–2017, when interest rates were ultralow in most countries. In addition, firms from countries with stronger employee protection and more generous retirement benefits tend to show higher levels of underfunding in their defined benefit (DB) pension plans. To the extent of pension underfunding imposing constraints on corporate investment, we find that firms in these countries can face more constraints on investment when their pension is underfunded.
Keywords
Citation
Kim, Y.H., Li, B., Paek, M. and Yu, T. (2024), "Corporate Pension Funding and Investments: Evidence From Asia Pacific Countries
Publisher
:Emerald Publishing Limited
Copyright © 2024 Yong H. Kim, Bochen Li, Miyoun Paek and Tong Yu. Published under exclusive licence by Emerald Publishing Limited