Abstract

https://ssrn.com/abstract=1327599
 


 



Why Do Healthy Firms Freeze Their Defined Benefit Pension Plans?


Christina Atanasova


Simon Fraser University (SFU)

Karel Hrazdil


Simon Fraser University

May 20, 2010

Global Finance Journal, Vol. 21, No. 3, pp. 293-303, 2010

Abstract:     
We examine firms' decisions in freezing their defined-benefit pension plans and the effect it has on shareholders’ wealth. Plan freezes help relieve sponsors of the implicit promises made to employees regarding future compensation. We find evidence that a pension plan freeze has a positive impact on sponsors’ equity returns and credit ratings. Firms that choose to freeze their pension plans experience an increase in equity return and a decrease in the probability of a credit downgrade.

Keywords: Defined benefit pensions, plan freeze, wealth transfer, equity returns, credit ratings

JEL Classification: G23, G32


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Date posted: January 14, 2009 ; Last revised: December 14, 2010

Suggested Citation

Atanasova, Christina and Hrazdil, Karel, Why Do Healthy Firms Freeze Their Defined Benefit Pension Plans? (May 20, 2010). Global Finance Journal, Vol. 21, No. 3, pp. 293-303, 2010. Available at SSRN: https://ssrn.com/abstract=1327599

Contact Information

Christina Atanasova (Contact Author)
Simon Fraser University (SFU) ( email )
8888 University Drive
Burnaby, British Columbia V5A 1S6
Canada
Karel Hrazdil
Simon Fraser University ( email )
Faculty of Business Administration
8888 University Drive, Simon Fraser University
Burnaby, British Colombia V5A 1S6
Canada
778-782-6790 (Phone)
778-782-4920 (Fax)
HOME PAGE: http://www.sfubusiness.ca
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