Golden handcuffs and corporate innovation: evidence from defined benefit pension plans

Huu Nhan Duong, Bin Qiu, S. Ghon Rhee

Research output: Contribution to journalArticleResearchpeer-review

2 Citations (Scopus)


This study examines the relation between employee incentives and corporate innovation. We find that firms with a higher defined benefit (DB) pension value secure more patents and patent citations. We further show that pension freezes, which stop the accumulation of pension obligations, negatively affect innovation outcomes. The value of a DB plan enhances innovation by motivating employees to produce higher output and through loyalty. However, pension deficits impede innovation because of the nature of inside debt. Overall, our findings call for a fresh look at pensions by policy makers and practitioners, given the historic shift away from DB plans. (JEL G31, G32, O31, O32).

Original languageEnglish
Pages (from-to)128-168
Number of pages41
JournalReview of Corporate Finance Studies
Issue number1
Publication statusPublished - Feb 2022

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