TY  - JOUR
AU  - Liang,Nellie
AU  - Weisbenner,Scott
TI  - Investor Behavior and the Purchase of Company Stock in 401(k) Plans - The Importance of Plan Design
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9131
PY  - 2002
Y2  - August 2002
UR  - http://www.nber.org/papers/w9131
L1  - http://www.nber.org/papers/w9131.pdf
N1  - Author contact info:
Nellie Liang
Federal Reserve Board
20th and Constitution Ave NW
Washington, DC 20551
E-Mail: jnellie.liang@frb.gov

Scott Weisbenner
University of Illinois at Urbana-Champaign
Department of Finance
340 Wohlers Hall, MC-706
1206 South Sixth Street
Champaign, IL  61820
Tel: 217/333-0872
Fax: 217/244-9867
E-Mail: weisbenn@illinois.edu
M2  - featured in NBER digest on 2003-01-01
AB  - Using panel data for nearly 1,000 companies during 1991 to 2000, this paper documents that the average share of participant's discretionary 401(k) contributions in company stock was almost 20 percent, and then relates this share to plan design features and firm financial characteristics.  We find that the number of investment alternatives offered, n, and whether the company requires some of the match to be in company stock are key factors of the share of total contributions in company stock.  We cannot reject the hypothesis that participants invest 1/n of their contributions in company stock.  In addition, participants do not offset an employer match in company stock with a smaller share of their own contributions to company stock, contrary to efficient diversification.  Workers also appear to view other plan restrictions as providing cues about the desirability of purchasing company stock.  Thus, plan design is very important in determining the share of 401(k) assets in company stock.
ER  -