Does Freezing a Defined-Benefit Pension Plan Increase Company Value? Empirical Evidence
This study empirically tests whether freezing or closing a defined-benefit (DB) pension plan increases the sponsoring company's market value. The database used for this study consists of 82 publicly traded U.S. companies that announced freezes/closes in 2003-2007. On the basis of this extensive...
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| Veröffentlicht in: | Financial analysts journal 2009-07, Vol.65 (4), p.47-59 |
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| creator | McFarland, Brendan Pang, Gaobo Warshawsky, Mark |
| description | This study empirically tests whether freezing or closing a defined-benefit (DB) pension plan increases the sponsoring company's market value. The database used for this study consists of 82 publicly traded U.S. companies that announced freezes/closes in 2003-2007. On the basis of this extensive sample and through a set of parametric and nonparametric tests under the event study methodology, the study finds generally negative or insignificant abnormal returns in stock prices that can be associated with the freeze/close events. Little evidence supports the hypothesis that freezing or closing a DB plan increases company value. |
| doi_str_mv | 10.2469/faj.v65.n4.2 |
| format | Article |
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Empirical Evidence</title><author>McFarland, Brendan ; Pang, Gaobo ; Warshawsky, Mark</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c347t-1219c3615fc16a7e4ceaa91896806f457de58dde9f71a7ba18257d096dad2a203</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2009</creationdate><topic>Abnormal returns</topic><topic>Business risks</topic><topic>Business structures</topic><topic>Corporate finance</topic><topic>Costs</topic><topic>Defined benefit pension plan</topic><topic>Defined benefit plans</topic><topic>Efficiency</topic><topic>Empirical evidence</topic><topic>Employee pension plans</topic><topic>Employees</topic><topic>Employers</topic><topic>Equity Investments</topic><topic>Financial management</topic><topic>Firm value</topic><topic>Freezing</topic><topic>Funding</topic><topic>Hypotheses</topic><topic>Investment risk</topic><topic>Market portfolios</topic><topic>Market value</topic><topic>Pension plans</topic><topic>Pension schemes</topic><topic>Prices</topic><topic>Public companies</topic><topic>Stock exchanges</topic><topic>Stock prices</topic><topic>Studies</topic><topic>U.S.A</topic><topic>Volatility</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>McFarland, Brendan</creatorcontrib><creatorcontrib>Pang, Gaobo</creatorcontrib><creatorcontrib>Warshawsky, Mark</creatorcontrib><collection>CrossRef</collection><collection>Global News & ABI/Inform Professional</collection><collection>Trade PRO</collection><collection>ProQuest Central (Corporate)</collection><collection>ABI/INFORM Collection</collection><collection>ABI/INFORM Global (PDF only)</collection><collection>Accounting & Tax Database</collection><collection>ProQuest Central (purchase pre-March 2016)</collection><collection>ABI/INFORM Global (Alumni Edition)</collection><collection>Accounting & Tax Database (Alumni Edition)</collection><collection>ProQuest Pharma Collection</collection><collection>International Bibliography of the Social Sciences (IBSS)</collection><collection>ProQuest Central (Alumni) (purchase pre-March 2016)</collection><collection>ABI/INFORM Collection (Alumni Edition)</collection><collection>Research Library (Alumni Edition)</collection><collection>ProQuest Central (Alumni Edition)</collection><collection>ProQuest Central UK/Ireland</collection><collection>Accounting, Tax & Banking Collection</collection><collection>ProQuest Central Essentials</collection><collection>ProQuest Central</collection><collection>Business Premium Collection</collection><collection>ProQuest One Community College</collection><collection>ProQuest Central Korea</collection><collection>International Bibliography of the Social Sciences</collection><collection>Accounting, Tax & Banking Collection (Alumni)</collection><collection>Business Premium Collection (Alumni)</collection><collection>ABI/INFORM Global (Corporate)</collection><collection>ProQuest Central Student</collection><collection>Research Library Prep</collection><collection>International Bibliography of the Social Sciences</collection><collection>ProQuest Business Collection (Alumni Edition)</collection><collection>ProQuest Business Collection</collection><collection>ABI/INFORM Professional Advanced</collection><collection>ABI/INFORM Professional Standard</collection><collection>ABI/INFORM Global</collection><collection>Research Library</collection><collection>Research Library (Corporate)</collection><collection>ProQuest One Business</collection><collection>ProQuest One Business (Alumni)</collection><collection>ProQuest One Academic Eastern Edition (DO NOT USE)</collection><collection>ProQuest One Academic</collection><collection>ProQuest One Academic UKI Edition</collection><collection>ProQuest Central China</collection><collection>ProQuest Central Basic</collection><collection>SIRS Editorial</collection><jtitle>Financial analysts journal</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>McFarland, Brendan</au><au>Pang, Gaobo</au><au>Warshawsky, Mark</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Does Freezing a Defined-Benefit Pension Plan Increase Company Value? Empirical Evidence</atitle><jtitle>Financial analysts journal</jtitle><date>2009-07-01</date><risdate>2009</risdate><volume>65</volume><issue>4</issue><spage>47</spage><epage>59</epage><pages>47-59</pages><issn>0015-198X</issn><eissn>1938-3312</eissn><coden>FIAJA4</coden><abstract>This study empirically tests whether freezing or closing a defined-benefit (DB) pension plan increases the sponsoring company's market value. The database used for this study consists of 82 publicly traded U.S. companies that announced freezes/closes in 2003-2007. On the basis of this extensive sample and through a set of parametric and nonparametric tests under the event study methodology, the study finds generally negative or insignificant abnormal returns in stock prices that can be associated with the freeze/close events. Little evidence supports the hypothesis that freezing or closing a DB plan increases company value.</abstract><cop>Charlottesville</cop><pub>CFA Institute</pub><doi>10.2469/faj.v65.n4.2</doi><tpages>13</tpages><oa>free_for_read</oa></addata></record> |
| fulltext | fulltext |
| identifier | ISSN: 0015-198X |
| ispartof | Financial analysts journal, 2009-07, Vol.65 (4), p.47-59 |
| issn | 0015-198X 1938-3312 |
| language | eng |
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| source | Business Source Complete; JSTOR Archive Collection A-Z Listing |
| subjects | Abnormal returns Business risks Business structures Corporate finance Costs Defined benefit pension plan Defined benefit plans Efficiency Empirical evidence Employee pension plans Employees Employers Equity Investments Financial management Firm value Freezing Funding Hypotheses Investment risk Market portfolios Market value Pension plans Pension schemes Prices Public companies Stock exchanges Stock prices Studies U.S.A Volatility |
| title | Does Freezing a Defined-Benefit Pension Plan Increase Company Value? Empirical Evidence |
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