In this study, we examine a sample of U.S. firms with defined benefit pensions plans and investigate how investors view under-funded plans. On average, investors reward firms with fully or over-funded pension plans and view deficits derived from under-funded plans as liabilities, while encouraging firms with under-funded plans to become funded. Investors also encourage conservative pension asset allocation to mitigate firm risk, and smaller firms are perceived as more able to manage the risk associated with underfunded plans. During the financial crisis of 2008, underfunded status had a positive association with market value, and firms that were underfunded during the financial crisis were discouraged from increasing funded status. Significant differences also exist pre- and post- Statement of Financial Accounting Standards No. 158 (SFAS 158). These results are robust to various scenarios of the timing of the financial crisis and an alternative measure of funding.