The Role of Institutional Investors in Pension Risk Transfers
Journal of Economics and Finance, 2021 https://doi.org/10.1007/s12197-020-09537-1
29 Pages Posted: 24 Jun 2021 Last revised: 15 Aug 2021
Date Written: June 15, 2021
Risk transfers represent a preferred method for removing pension liabilities from corporate balance sheet. We examine the role of institutional shareholders on firm’s decision to offload pension liabilities to professional risk managers. We find that the likelihood of pension risk transfers is higher for firms with higher level of institutional ownership and independent institutional owners. Firms with higher concentration of institutional ownership adopting a passive investment strategy are less likely to complete pension risk transfers. We also document the plan and sponsor-level factors affecting firms’ decision to undertake pension risk transfers.
Keywords: Institutional Investors, Defined Benefit Plans, Risk Transfers, Funding Deficit
JEL Classification: G3, G1, G2
Suggested Citation: Suggested Citation