Article1992

Pension Reversions and Worker-Stockholder Wealth Transfers

114 citations0/0 files storedThe Quarterly Journal of Economics

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Corporate Finance and Governance Financial Literacy, Pension, Retirement Analysis Retirement, Disability, and Employment

Abstract

This paper examines the relative importance of transfers from workers to shareholders in the firm's decision to terminate their overfunded defined benefit pension plans. In contrast to earlier studies, I find evidence that firms terminate their pension plans to relieve themselves of implicit promises to workers of future compensation. In addition, financing and tax considerations influence the reversion decision. The results suggest that the 1986 excise tax on asset reversions reduced termination for reversion by 36 percent in 1986.

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1984Corporate financing and investment decisions when firms have information that investors do not have 1977Determinants of corporate borrowing 1985The Labor Contract and True Economic Pension Liabilities 1982What are Corporate Pension Liabilities?

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1999Declining Job Security 1998Pension Plan Funding and Corporate Debt Ratings 2013Does freezing a defined benefit pension plan affect firm risk?1994Cash flow variability and firm's pension choice 2004The effect of financial constraints and political pressure on the management of public pension plans 2007Corporate Governance of Pension Plans: The U.K. Evidence 2020Cost saving and the freezing of corporate pension plans 1996Are 401(k) Plans Replacing Other Employer-Provided Pensions? Evidence from Panel Data

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