Scale Economies in Union Pension Plan Administration: 1981–1993

We confirm previous findings that as the pension plan size increases, administrative costs per participant and asset fall after controlling for the proportion of retirees in a plan. However, we question the inference that the high costs of administering small plans partly explains why small firms generally do not sponsor pension plans. This study uses Internal Revenue Service annual data to compare the administrative costs of Taft-Hartley plans from 1981 to 1993. Centralization may save costs but also may inhibit formation. Union plans are naturally small; they form at the local level.     

Toward Explaining the Growth of Defined Contribution Plans

Since 1980, defined benefit plans have steadily lost market share to defined contribution plans. In 1979, defined contribution plans had 17 percent of the primary pension market. By 1988, it was 34 percent. About half of the shift is attributable to a loss of employment in large unionized firms where defined benefit plans are used intensively. But evidence of large changes in preferences is also found in the data. One likely explanation is the introduction of a new variety of defined contribution plans, so-called 401(k)s. These pension plans have productivity traits that make them more effective competition for defined benefit plans.     

Pension Substitution in the 1980s: Why the Shift toward Defined Contribution?

The relative decline of defined benefit (DB) pension plans, and growth of defined contribution (DC) plans, has been often noted but not extensively explored. This paper reports on the construction of a new longitudinal company-based data set on pension plans for the years 1980-86 (including all U.S. companies with large plans, and a 10 percent sample of companies with small plans, at any point during this period). The decline in DB coverage is primarily due to fewer participants in companies maintaining such plans, while very little of the growth in DC coverage is due to companies terminating DB plans. Also, multinomial logit analysis of manufacturing company choices indicates that the higher administrative costs of DB plans lead new adopters to favor DC plans, but this explains little of the tremendous growth in DC plans. In addition, higher industry variability and capital intensity, and smaller company size, lead new adopters to favor DC plans.     

Explaining Patterns of Profit-Sharing Activity

This paper compares the characteristics of firms that adopt deferred profit-sharing plans with those that adopt pension plans. Tax reports from a sample of 6, 000 firms in various industries are incorporated into logistic regression equations that predict whether these firms will have pension or deferred profit-sharing plans. The evidence suggests that custom in the labor market may play the greatest role in influencing the choice between the two plans.     

The Stampede Toward Defined Contribution Pension Plans: Fact or Fiction?

This paper questions recent conclusions that the trend in primary plan type toward defined contribution plans and away from defined benefit plans is due to increased pension regulation. Analysis of data from IRS 5500 filings by pension administrators shows that at least half of the trend is due to a shift in employment mix toward firms with industry, size, and union status that have historically been associated with lower defined benefit plan rates. Not more than half of the trend can be attributed to a "stampede" by firms with given industry, size, and union status toward defined contribution pension coverage.     

Cash Balance Plans and the Distribution of Pension Wealth

Recent pension plan conversions by numerous large employers have sparked debate about the merits of cash balance plans. This article compares pension wealth in traditional defined benefit (DB) plans and cash balance plans for a national sample of covered Americans aged 51 to 61. The simulations indicate that replacing DB plans with cash balance plans would redistribute pension wealth from those with long-term jobs to those with multiple short-term jobs and from those with substantial pension benefits to those with more limited benefits. Perhaps unexpectedly, women at midlife in 1992 with DB coverage would lose wealth in cash balance plans, but future cohorts of women are likely to fare better.     

Defined Contribution Plans and the Distribution of Pension Wealth

Over the past 20 years, the defined benefit (DB) plan has been replaced by the defined contribution (DC) plan as the most popular form of pension plan. This study examines the likely consequences of this transformation for both the level and distribution of future pension wealth using a sample of DB and DC plans from the Survey of Consumer Finances. The results reveal that the shift from DB to DC plans is likely to simultaneously increase the level and inequality of pension wealth at retirement. The evidence also suggests that the shift to DC plans may result in less pension wealth at retirement for low‐income workers, women, and minorities.     

An Empirical Analysis of the Relationship between Employee Ownership and Employment Stability in the US: 1999–2011

Do firms with employee ownership (EO) programs exhibit greater employment stability in the face of economic downturns? In particular, are firms with EO programs less likely to lay off workers during negative shocks? In this article, we examine the relationship between EO programs and employment stability in the United States using longitudinal Form 5500‐CompuStat matched data on the universe of publicly traded companies during 1999–2011. We examine how firms with EO programs weathered the recessions of 2001 and 2008 in terms of employment stability relative to firms without EO programs, and also whether such firms were less likely to lay off workers when faced with negative shocks more broadly. In our econometric analyses, we use a rich array of measures of EO at firms, including the presence of EO stock in pension plans, the presence of employee stock ownership plans (ESOPs), the value of EO stock per employee, the share of the firm owned by employees, the share of workers at the firm participating in EO and the share of workers at the firm participating in ESOPs. We also consider both economy‐wide negative shock measures (increases in the unemployment rate, declines in the employment‐to‐population ratio) and firm‐specific negative shock measures (declines in firm sales, declines in firm stock price). Our results indicate that EO firms exhibit greater employment stability in the face of economy‐wide and firm‐specific negative shocks.     

Financial and stock market variables as predictors of management buyouts

This paper investigates whether publicly held firms which change to private ownership through management buyouts (ex-public firms) possess characteristics prior to the change which differentiate them from firms which remain publicly owned. The financial characteristics of ex-public firms for the year immediately prior to going private were analyzed. A multivariate framework was developed to determine which attributes best distinguished firms going private via management buyouts from similar firms not going private. A discriminant function was developed using seven ratios: (1) concentration of ownership, (2) cash flow to net worth, (3) cash flow to total assets, (4) price/earnings ratio, (5) price/book value ratio, (6) book value of depreciable assets in relation to original costs, and (7) dividend yield. The model demonstrated a classification accuracy of 77.8 percent for the original sample and 81.4 percent in a hold-out sample validation. These findings imply that financial characteristics alone provide a means by which firms going private via management buyouts can be separated from others. Therefore one can argue that, regardless of the stated motive for going private, financial characteristics either are explicit decision variables or directly reflect non-financial reasons for management buyouts.     

Faculty Choice of a Pension Plan: Defined Benefit versus Defined Contribution

Worker preferences between defined-benefit and defined-contribution pension plans are estimated using a sample of faculty members at North Carolina State University. Newly hired faculty must decide between the state retirement plan (a final pay, defined-benefit plan) and one of three defined-contribution plans (TIAA/CREF, VALIC, Lincoln National). This analysis allows the authors to estimate the choice of a pension plan holding constant the place of employment. The study uses both university employment records and a faculty survey to examine the factors that determine the choice of a pension.     

Why Do Firms Adopt Profit-Sharing and Employee Ownership Plans?

Profit-sharing and employee ownership in companies have attracted considerable interest, yet there has been little research on factors predicting the adoption and maintenance of these plans. This study uses new data from a survey of 500 US public companies, and panel data on corporate financial variables, to examine factors predicting the presence and adoption of profit- sharing and employee stock ownership plans (ESOPs) in the 1975–91 period. Several findings support productivity-related motivations for such plans (including higher R&D levels among old profit-sharing firms, and recent adoption of job enrichment programmes among new profit-sharing firms), while others support flexibility-related motivations (including higher variance in profits prior to the adoption of profit-sharing plans and ESOPs). Unionized firms were less likely to have either type of plan in 1975, but equally likely to adopt them subsequently (often in concessionary contracts). Comparisons of cross-sectional and panel results illustrate advantages of panel data in disentangling the causes and effects of profit-sharing and ESOPs.     

The Survival Rate of Defined-Benefit Plans, 1987-1995

We look at the survival rate of defined-benefit pension plans with at least 500 participants over the period 1987–1995. We find that termination in favor of defined-contribution plans is a rare event and that the vast majority of these plans survive, albeit often under a different plan sponsor or in a new merged plan. Indeed, the frequency of mergers is an important feature in the pension market and partially explains the growing number of large defined-benefit plans.     

Short-term financing in a cash-constrained supply chain

In this paper we consider a two-level supply chain with a single retailer and a manufacturer, where both the firms are facing financial constraints and can not produce/order their optimal quantity. Our work shows that a lender who finances the manufacturer has a motivation to finance the retailer as well. Motivated by this, we investigate lender's problem of financing both the firms by making a joint decision on the loan amount and comparing it with the case when lender makes independent decision on loan amount for both the firms. Our numerical study indicates that if one of the firms in the supply chain has sufficiently low cash, joint decision (we refer to it as supply chain financing) may be better not only for the lender but for the retailer and manufacturer as well.     

Successful bear-fighting strategies

This paper explores the factors involved in determining the differential performance of firms in bear markets. Bear markets are identified at the industry level by employing the criterion of a 20 percent drop of the industrial value added index over a period of at least 3 years. Twenty-one matched pairs of Dutch firms which have experienced such bear markets (one successful, the other unsuccessful), are analyzed. The dominant finding is that successful firms follow market-oriented strategies, whereas their unsuccessful counterparts are distinguished by their focus on costs. Success, however, is a multifaceted phenomenon. Differences in initial conditions, in other types of strategic measures, in energy levels and in timing are also involved. The findings are related to the literatures on decline, failure, turnaround and transformation.     

Growth of Participant Direction in Defined Contribution Plans

Using data from IRS Form 5500, this study examines the causes and consequences of the shift toward participant direction of investments in defined contribution plans. The analysis reveals that collective bargaining and pension investments in employer stock reduce the chance of a switch to participant direction, whereas below average returns increases the chance. Also, a switch to participant direction increases employee contributions to the pension and reduces the share of assets invested in employer securities.     

Mode of entry and ex-post performance

In this study I develop and empirically test hypotheses delineating how a set of industry- and firm-level factors are differentially associated with postentry performance of de novo and acquisitive entrants. First, I conceptualize structural entry barriers as sunk costs or irrecoverable investments that entrants must make in the entered industry to be competitive vis-à-vis incumbents. I then argue that de novo and acquisitive entrants differ in three important ways: (1) incremental vs. up-front sunk cost investments in overcoming impediments to entry; (2) increasing productive capacity vs. changing ownership in the entered industry; and (3) low vs. high costs of integration when realizing synergies with parent firms. I use the Trinet, FTC-ALB, and Compustat data bases to construct a sample comprising de novo and acquisitive entries made during the period 1980–82. Next, I evaluate postentry survival and growth between 1982 and 1986. Overall, empirical tests provided partial support for the hypotheses, and the explained variance in my models ranged from 17 percent to 37 percent. © 1998 John Wiley & Sons, Ltd.     

Incentive and Redistributive Effects of Private-Sector Union Pension Plans in Canada

Using data for pension plans in the private sector for males in Canada, this paper examines flat benefit plans, which predominate in the union sector, documenting their work and retirement incentives, the extent to which retroactive enrichments redistribute wealth within union membership, and the impact of anticipated enrichments on the timing of early retirement decisions     

信息技术应用对企业纵向边界的影响--实证研究与讨论

基于交易成本理论的分析表明：信息技术应用节约了企业的内部协调成本和外部交易成本，从而影响企业纵向边界的变动，然而这一理论推断需要进一步的检验。本文利用我国信息技术行业的数据进行实证研究．分析信息技术应用与企业纵向边界变动之间的关系。结果表明：现阶段的信息技术应用使企业纵向边界呈现扩大的趋势。文章据此讨论了中外企业信息化进程的差异和影响．并解释研究结果对企业规模边界和能力边界变动趋势的含义。     

Sunk Costs,Extensive R&D Subsidies and Permanent Inducement Effects

Using firm‐level data on Spanish manufacturing firms we estimate a model of the firm's optimal R&D decisions (whether to perform R&D and how much to invest). We quantify the fixed (proper fixed costs plus firms' outside option) and sunk costs of R&D and find the former to be substantially higher than the latter. While sunk costs act as a barrier to entry into R&D for some firms, fixed costs are the binding obstacle for many more firms. Simulation based on the estimated model reveals that one‐shot trigger subsidies cause a substantial increase in both the share of R&D firms and average R&D expenditures. This effect shows persistence over time, but totally fades away after seven years as firms are gradually hit by negative R&D profitability shocks.