The report focused on the 100 largest companies included in the Standard & Poor’s 500 index.
It found that operating income got a 6% boost in 2000 due to earnings generated by pension plans, compared with a 4% increase the previous year.
Investors place a great deal of emphasis on earnings in their investment decisions because they believe that the earnings will ultimately benefit them through dividends or stock buybacks.
Although they are embedded in the returns of the company, the pension aspect of performance has nothing to do with the current performance of the management, which is what investors want to see on an income statement.
According to the study, profitability was enhanced by between 3% and 6% in the following companies:
- Lucent Technologies
- Verizon Communications
- Allegheny Technologies