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Pension Contributions and Firm Performance: Evidence from Frozen Defined Benefit Plans

Financial management, 2013-06, Vol.42 (2), p.373-411 [Peer Reviewed Journal]

2013 Financial Management Association International ;2012 Financial Management Association International ;COPYRIGHT 2013 Financial Management Association ;Copyright Blackwell Publishing Ltd. Summer 2013 ;ISSN: 0046-3892 ;EISSN: 1755-053X ;DOI: 10.1111/j.1755-053X.2012.01218.x

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Title:
Pension Contributions and Firm Performance: Evidence from Frozen Defined Benefit Plans
Author: Phan, Hieu V. ; Hegde, Shantaram P.
Subjects: Benefit plans ; Cash flow ; Contributions ; Defined benefit plans ; Economic aspects ; Employee pension plans ; Financial investments ; Financial leverage ; Funding ; Investment ; Investment value ; Investors ; Leverage (Finance) ; Liquidity ; Liquidity (Finance) ; Market value ; Methods ; Pension contributions ; Pension funds ; Pension liabilities ; Pension plans ; Pensions ; Stock returns ; Studies
Is Part Of: Financial management, 2013-06, Vol.42 (2), p.373-411
Description: We study the impact of freezing defined benefit (DB) pension plans and replacing them with defined contribution (DC) plans on liquidity, financial leverage, investment, and market value of a sample of firms over 2001-2008. We find evidence that the pension freeze tends to attenuate the drain on corporate liquidity and relieve the pressure to borrow to pay for mandatory contributions (MCs) associated with underfunded DB plans. Although investors seem to favor the pension freeze as evidenced by positive announcement abnormal stock returns, there is little reliable evidence that the freeze increases investment efficiency and long-term stock performance.
Publisher: Melbourne, Australia: Blackwell Publishing Asia
Language: English
Identifier: ISSN: 0046-3892
EISSN: 1755-053X
DOI: 10.1111/j.1755-053X.2012.01218.x
Source: Alma/SFX Local Collection

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Pension Contributions and Firm Performance: Evidence from Frozen Defined Benefit Plans

2013 Financial Management Association International ;2012 Financial Management Association International ;COPYRIGHT 2013 Financial Management Association ;Copyright Blackwell Publishing Ltd. Summer 2013 ;ISSN: 0046-3892 ;EISSN: 1755-053X ;DOI: 10.1111/j.1755-053X.2012.01218.x

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