firm into two parts: (1) the risk due to the investment strategy of the pension plan (“Mismatch Risk”); and (2) the risk …We develop an analytical framework that divides the contribution of pension risk to the total systematic risk of the … due to the funded status of the pension plan (“Deficit Risk”). We then use this framework to show that the financial …

. The result is a negative and economically significant relation between pension risk and corporate investment. The effect …Failure to correct for pension risk leads to upward-biased discount rate estimates in firms with pension risk exposure … is confined to investment decisions that require discount rate estimates. Moreover, it is stronger if project value is …