The Effects of Corporate Pension Plans on Capital Structure: Evidence from China

Abstract

With the increasing aging population in China, corporate pension plans have become an important pillar for the pension system. From the perspective that pension plans can affect employees’ perceptions of bankruptcy risk, we show that corporate pension plans significantly increase the debt ratio, especially for companies in high labor-intensive industries, which generally have higher educated and younger employees. This paper not only enriches the labor economy literature on how labor impacts the financial decision-making of companies, but also provides some practical suggestions to improve China’s corporate pension plan system.