Board Independence and Changes in Defined-Benefit Plan Funding

• Published in: Advances in Industrial and Labor Relations Vol. 21; pp. 119 - 141
• Main Author: Mullins, Frank
• Format: Book Chapter
• Language: English
• Published: United Kingdom Emerald Group Publishing Limited 01.01.2015; Emerald Publishing Limited
• Subjects: HR & Organizational Behaviour; Industrial relations; Industrial/Labour Relations; board of directors; outside director representation; Defined-benefit plans; outside director ownership; CEO duality
• ISBN: 9781784413804; 1784413801
• ISSN: 0742-6186
• DOI: 10.1108/S0742-618620140000021005

Abstract The funding of defined-benefit plans has garnered the attention of academicians, practitioners, and policymakers. Drawing upon agency and organizational control theories, this study investigates the implications of board independence on changes in defined-benefit funding. Using a panel dataset of S&P 500 companies sponsoring defined-benefit plans, the author finds that corporate boards matter. Specifically, CEO duality and outside director representation are associated with year-to-year decreases in defined-benefit funding. Conversely, outside director ownership is related to year-to-year increases in defined-benefit funding. Furthermore, outside director ownership moderated the relationship between outside director representation and defined-benefit funding such that outside director representation is associated with year-to-year increases in defined-benefit plan funding when the percentage of outside director ownership is high.