Why do healthy firms freeze their defined-benefit pension plans?
We examine the firms' decisions in freezing their defined-benefit pension plans and the effect it has on shareholders' wealth. Plan freezes help relieve sponsors of the implicit promises made to employees regarding future compensation. We find evidence that a pension plan freeze has a positive impact on sponsors' equity returns and credit ratings. Firms that choose to freeze their pension plans experience an increase in equity return and a decrease in the probability of a credit downgrade.
Year of publication: |
2010
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Authors: | Atanasova, Christina ; Hrazdil, Karel |
Published in: |
Global Finance Journal. - Elsevier, ISSN 1044-0283. - Vol. 21.2010, 3, p. 293-303
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Publisher: |
Elsevier |
Keywords: | Defined-benefit pensions Plan freeze Wealth transfer Equity returns Credit ratings |
Saved in:
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