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

See all articles by Elisabeta Pana

Elisabeta Pana

Central Connecticut State University

Mary McCarthy

Central Connecticut State University

Andrew Weinberger

Central Connecticut State University

Date Written: June 15, 2021

Abstract

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

Pana, Elisabeta and McCarthy, Mary and Weinberger, Andrew, The Role of Institutional Investors in Pension Risk Transfers (June 15, 2021). Journal of Economics and Finance, 2021 https://doi.org/10.1007/s12197-020-09537-1, Available at SSRN: https://ssrn.com/abstract=3867395 or http://dx.doi.org/10.2139/ssrn.3867395

Elisabeta Pana (Contact Author)

Central Connecticut State University ( email )

1615 Stanley Street
New Britain, CT 06050
United States

Mary McCarthy

Central Connecticut State University ( email )

1615 Stanley Street
New Britian, CT 06050
United States

Andrew Weinberger

Central Connecticut State University ( email )

1615 Stanley St
Maria Sanford Hall - Room 304
New Britain, CT 06053
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
4
Abstract Views
116
PlumX Metrics