Impact of Pension Plan Funding Status on M&A Activity
Jayesh Kumar, Michael Orszag, Mirko Cardinale and Gabriel Katz, BACKGROUND RISK AND PENSIONS: British Actuarial Journal, Vol. 12, No. 1, pp. 79-134, 2006
18 Pages Posted: 12 Sep 2006 Last revised: 8 Mar 2012
Date Written: August 1, 2006
This study examines the role of pension plan funding status on M&A activity of acquiring/target firms in a large sample of UK corporations. We exploit the funding status of the defined benefit pension plans in order to identify, the dependence of corporate activity in mergers and acquisition market on its pension plan funding status. Pension deficit appear to have a negative impact on the likelihood of target firms being acquired, suggesting pension deficits act as a poison pill.
Keywords: M&A, Pension Plan Funding, Count Data Model
JEL Classification: C23, C35, G23, G34
Suggested Citation: Suggested Citation