Skip to main content
Erschienen in: Journal of Economics and Finance 3/2022

18.05.2022

Shareholder response to pension deficit: evidence from the COVID-19 pandemic

verfasst von: Amanjot Singh, Harminder Singh

Erschienen in: Journal of Economics and Finance | Ausgabe 3/2022

Einloggen

Aktivieren Sie unsere intelligente Suche, um passende Fachinhalte oder Patente zu finden.

search-config
loading …

Abstract

We examine the impact of firms’ pre-crisis pension underfunding on stock returns of US firms during the COVID-19 stock market crisis. Unlike the prior studies, our study uses the COVID-19 pandemic as an exogenous shock to pension underfunding and reports that shareholders remain indifferent to firms’ pension underfunding. The impact of pension underfunding remains trivial even after considering firms’ possible financial constraints, information asymmetry, and mandatory contributions associated with the underfunding. Our findings suggest that shareholders acknowledge pension deficit as a firm’s true liability only when pension underfunding contributions start affecting earnings and cash flows in the future.

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

  • über 102.000 Bücher
  • über 537 Zeitschriften

aus folgenden Fachgebieten:

  • Automobil + Motoren
  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Elektrotechnik + Elektronik
  • Energie + Nachhaltigkeit
  • Finance + Banking
  • Management + Führung
  • Marketing + Vertrieb
  • Maschinenbau + Werkstoffe
  • Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

  • über 67.000 Bücher
  • über 340 Zeitschriften

aus folgenden Fachgebieten:

  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Finance + Banking
  • Management + Führung
  • Marketing + Vertrieb
  • Versicherung + Risiko




Jetzt Wissensvorsprung sichern!

Anhänge
Nur mit Berechtigung zugänglich
Fußnoten
1
https://​www.​willistowerswats​on.​com/​en-US/​News/​2020/​04/​covid-19-takes-bite-out-of-us-corporate-pension-plans. Pension plan assets decreased from $1.52 (at the end of 2019) to $1.40 trillion as of March 31, 2020. On the other hand, pension plan liabilities increased from $1.75 (at the end of 2019) to $1.76 trillion as of March 31, 2020. According to the company, pension funded status (i.e., pension plan assets divided by pension plan liabilities) decreased from 87% at the end of 2019 to 79% as of March 31, 2020.
 
Literatur
Zurück zum Zitat Albuquerque R, Koskinen Y, Yang S, Zhang C (2020) Resiliency of environmental and social stocks: An analysis of the exogenous COVID-19 market crash. Rev Corp Finance Stud 9(3):593–621CrossRef Albuquerque R, Koskinen Y, Yang S, Zhang C (2020) Resiliency of environmental and social stocks: An analysis of the exogenous COVID-19 market crash. Rev Corp Finance Stud 9(3):593–621CrossRef
Zurück zum Zitat Bae KH, Ghoul E, Gong S, Guedhami O (2021) Does CSR matter in times of crisis? Evidence from the COVID-19 pandemic. J Corp Finance 67:101876CrossRef Bae KH, Ghoul E, Gong S, Guedhami O (2021) Does CSR matter in times of crisis? Evidence from the COVID-19 pandemic. J Corp Finance 67:101876CrossRef
Zurück zum Zitat Baker SR, Bloom N, Davis SJ, Kost K, Sammon M, Viratyosin T (2020) The unprecedented stock market reaction to COVID-19. Rev Asset Pricing Stud 10(4):742–758CrossRef Baker SR, Bloom N, Davis SJ, Kost K, Sammon M, Viratyosin T (2020) The unprecedented stock market reaction to COVID-19. Rev Asset Pricing Stud 10(4):742–758CrossRef
Zurück zum Zitat Balachandran B, Duong HN (2019) Pension deficits and the design of private debt contracts. J Financial Quant Anal 54(4):1821–1854CrossRef Balachandran B, Duong HN (2019) Pension deficits and the design of private debt contracts. J Financial Quant Anal 54(4):1821–1854CrossRef
Zurück zum Zitat Bergstresser D, Desai M, Rauh J (2006) Earnings manipulation, pension assumptions, and managerial investment decisions. Quart J Econ 121(1):157–195 Bergstresser D, Desai M, Rauh J (2006) Earnings manipulation, pension assumptions, and managerial investment decisions. Quart J Econ 121(1):157–195
Zurück zum Zitat Cocco JF, Volpin PF (2013) Corporate pension plans as takeover deterrents. J Financial Quant Anal 48(4):1119–1144CrossRef Cocco JF, Volpin PF (2013) Corporate pension plans as takeover deterrents. J Financial Quant Anal 48(4):1119–1144CrossRef
Zurück zum Zitat Cocco JF (2014) Corporate pension plans. Annual Rev Financial Econ 6(1):163–184CrossRef Cocco JF (2014) Corporate pension plans. Annual Rev Financial Econ 6(1):163–184CrossRef
Zurück zum Zitat Comprix J, Muller III, K. A (2011) Pension plan accounting estimates and the freezing of defined benefit pension plans. J Account Econ 51(1–2):115–133CrossRef Comprix J, Muller III, K. A (2011) Pension plan accounting estimates and the freezing of defined benefit pension plans. J Account Econ 51(1–2):115–133CrossRef
Zurück zum Zitat Franzoni F, Marin JM (2006) Pension plan funding and stock market efficiency. J Finance 61(2):921–956CrossRef Franzoni F, Marin JM (2006) Pension plan funding and stock market efficiency. J Finance 61(2):921–956CrossRef
Zurück zum Zitat Gillan S, Starks LT (2007) The evolution of shareholder activism in the United States. J Appl Corp Finance 19(1):55–73CrossRef Gillan S, Starks LT (2007) The evolution of shareholder activism in the United States. J Appl Corp Finance 19(1):55–73CrossRef
Zurück zum Zitat Hadlock CJ, Pierce JR (2010) New evidence on measuring financial constraints: moving beyond the KZ index. Rev Financial Stud 23:1909–1940CrossRef Hadlock CJ, Pierce JR (2010) New evidence on measuring financial constraints: moving beyond the KZ index. Rev Financial Stud 23:1909–1940CrossRef
Zurück zum Zitat Jin L, Merton RC, Bodie Z (2006) Do a firm’s equity returns reflect the risk of its pension plan? J Financ Econ 81(1):1–26CrossRef Jin L, Merton RC, Bodie Z (2006) Do a firm’s equity returns reflect the risk of its pension plan? J Financ Econ 81(1):1–26CrossRef
Zurück zum Zitat Opie W, Tian GG, Zhang HF (2019) Corporate pyramids, geographical distance, and investment efficiency of Chinese state-owned enterprises. J Bank Finance 99:95–120CrossRef Opie W, Tian GG, Zhang HF (2019) Corporate pyramids, geographical distance, and investment efficiency of Chinese state-owned enterprises. J Bank Finance 99:95–120CrossRef
Zurück zum Zitat Ramelli S, Wagner AF (2020) Feverish stock price reactions to COVID-19. Rev Corp Finance Stud 9(3):622–655CrossRef Ramelli S, Wagner AF (2020) Feverish stock price reactions to COVID-19. Rev Corp Finance Stud 9(3):622–655CrossRef
Zurück zum Zitat Rauh JD (2006) Investment and financing constraints: Evidence from the funding of corporate pension plans. J Finance 61(1):33–71CrossRef Rauh JD (2006) Investment and financing constraints: Evidence from the funding of corporate pension plans. J Finance 61(1):33–71CrossRef
Zurück zum Zitat Yu FF (2008) Analyst coverage and earnings management. J Financ Econ 88(2):245–271CrossRef Yu FF (2008) Analyst coverage and earnings management. J Financ Econ 88(2):245–271CrossRef
Metadaten
Titel
Shareholder response to pension deficit: evidence from the COVID-19 pandemic
verfasst von
Amanjot Singh
Harminder Singh
Publikationsdatum
18.05.2022
Verlag
Springer US
Erschienen in
Journal of Economics and Finance / Ausgabe 3/2022
Print ISSN: 1055-0925
Elektronische ISSN: 1938-9744
DOI
https://doi.org/10.1007/s12197-022-09581-z

Weitere Artikel der Ausgabe 3/2022

Journal of Economics and Finance 3/2022 Zur Ausgabe