Pension Funds and the Required Minimum Funding Ratio: A Research on Earnings Management in Dutch Pension Funds

22 Pages Posted: 19 Oct 2012 Last revised: 21 Oct 2012

See all articles by Peter Westerduin

Peter Westerduin

affiliation not provided to SSRN

Jerry Wouterson

Nyenrode Business University

Henk P. A. J. Langendijk

University of Amsterdam

Date Written: October 18, 2012

Abstract

This paper suggests that the financial crisis, which made itself felt at end of 2008, gave company pension funds in the Netherlands cause to manage the funding ratio, in order to prevent it from dropping below the level of the required minimum funding ratio. On the other hand, industry-wide pension funds have not managed their funding ratio. Possible explanations are: the (stronger) involvement of social partners, and the greater social and political visibility of industry-wide pension funds. In addition, the sponsor of a company pension fund usually sits on the Managing Board of the pension fund and, in this way, is able to exercise influence on the policy of the pension fund.

Keywords: Discontinuity, Earnings management, Financial crisis, Funding ratio, Pension funds, Threshold

JEL Classification: G23, M4

Suggested Citation

Westerduin, Peter and Wouterson, Jerry and Langendijk, Henk P. A. J., Pension Funds and the Required Minimum Funding Ratio: A Research on Earnings Management in Dutch Pension Funds (October 18, 2012). Available at SSRN: https://ssrn.com/abstract=2163732 or http://dx.doi.org/10.2139/ssrn.2163732

Peter Westerduin (Contact Author)

affiliation not provided to SSRN ( email )

Jerry Wouterson

Nyenrode Business University ( email )

Straatweg 25
P.O. Box 130
Breukelen, 3620 AC
Netherlands

Henk P. A. J. Langendijk

University of Amsterdam ( email )

Department of Accountancy & Information Management Roetersstraat 11
Amsterdam 1018 WB
Netherlands
+31 20 525-4260 (Phone)
+31 20 525-5281 (Fax)

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