Labour unions and corporate pension policy


  • Kyongsun Heo Business School, Kangnam University, South Korea.
  • Jinhan Pae Business School, Korea University, South Korea.



IFRS, Labour unions, Pension accounting, Pension funding ratio.


The purpose of this study is to investigate the effect of labour unions on corporate pension policies. Using firm-level labour union data, it examines whether organized labour mitigates the understatement of pension liabilities on the statement of financial position. Next, we examine whether union presence affects external corporate pension funding. We find that firms with labour unions tend to report smaller actuarial gains (or larger actuarial losses) associated with the remeasurement of pension liabilities, suggesting that labour unions play a monitoring role in the reporting of corporate pension liabilities and/or that firms try to enhance their bargaining power with the labour union by exaggerating their financial burden of corporate pension liabilities. We do not find that the pension funding level (the ratio of the fair value of plan assets to pension liabilities) is higher for firms with labour unions. Overall, our results indicate that labour unions constrain management incentives to understate pension liabilities, but they have limited influence on corporate pension funding decisions.


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How to Cite

Heo, K. ., & Pae, J. . (2023). Labour unions and corporate pension policy . International Journal of Applied Economics, Finance and Accounting, 17(1), 50–58.