For this study of the governance of defined-benefit pension plans in the United
Kingdom, the governance measure was equal to the proportion of trustees of the
pension plan in 2002 who were also executive directors of the sponsoring
company. The findings indicate that pension plans of indebted companies with a
higher proportion of insider than independent trustees invest a higher
proportion of pension plan assets in equities and that the sponsors contribute
less to the plan and have a larger dividend payout ratio. This evidence supports
the agency view that insider trustees act in the interests of shareholders of
the sponsor, not necessarily in the interests of pension plan members.