The relationship between pension plan funding levels and capital structure: further evidence of a pecking order.(analysis of pension funds)

From: Journal of Academy of Business and Economics | Date: January 1, 2003| Author: Moody, Sharon M.; Phillips, Aaron L. | Copyright information

ABSTRACT

The literature on defined benefit pension plans presumes firm managers make an economic choice to overfund or underfund their defined benefit pension plans irrespective of other firm operating conditions and/or financing practices. Theoretically, overfunding is encouraged due to the tax deductibility of the pension expense and the non-taxed status of pension plan earnings. Alternatively, underfunding might occur due to poor cash flow or the firm's ability to ear...

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