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Does Common Ownership Affect Employee Welfare? Evidence from Corporate Pension Funding
By Charles Hsu, Zhiming Ma & Kaitang Zhou
This study examines the effect of common institutional ownership on corporate pension funding. We posit that a common owner’s incentive to maximize shareholder value may come at the cost of employee welfare. Consistent with this prediction, we find robust evidence that firms with common ownership demonstrate greater pension underfunding than firms without common ownership. This effect increases with firms’ value-added activities, common owners’ shareholding, duration of ownership, and portfolio size. It decreases with labor union power and managers’ own pension interests. Overall, our results suggest that common ownership might adversely affect the welfare of a key firm stakeholder: employees..
Source @SSRN
