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

Watson Wyatt Technical Paper No. 2006-TR-05

18 Pages Posted: 12 Sep 2006 Last revised: 8 Mar 2012

See all articles by Jayesh Kumar

Jayesh Kumar

Kotak Securities; Manappuram Finance Limited

Date Written: August 1, 2006

Abstract

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

Kumar, Jayesh and Kumar, Jayesh, Impact of Pension Plan Funding Status on M&A Activity (August 1, 2006). Jayesh Kumar, Michael Orszag, Mirko Cardinale and Gabriel Katz, BACKGROUND RISK AND PENSIONS: British Actuarial Journal, Vol. 12, No. 1, pp. 79-134, 2006, Watson Wyatt Technical Paper No. 2006-TR-05, Available at SSRN: https://ssrn.com/abstract=929647 or http://dx.doi.org/10.2139/ssrn.929647

Jayesh Kumar (Contact Author)

Manappuram Finance Limited ( email )

Valapad
Thrissur, 680567
India

Kotak Securities ( email )

Mumbai
Mumbai, 400050
India

HOME PAGE: http://www.kotaksecurities.com

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