Corporate Pension Funding Levels, Firm Performance, and Dividend Payout Ratios

This study employs a large sample of defined-benefit pension plans sponsored by publicly traded US corporations over the period 1998–2016, and it explores the impact of the level of pension funding on firm performance and dividend payout policy. Using panel regression analysis, the study finds evidence of significant positive association between the level of pension funding and both firm performance and dividend payout. The results have a number of important implications that should be cause for concern for policymakers and a wide range of stakeholders, including investors, pensioners, employees, and managers.