Please use this identifier to cite or link to this item:
http://bura.brunel.ac.uk/handle/2438/28039
Title: | Pension de-risking choice and firm risk: Traditional versus innovative strategies |
Authors: | Li, Z Kara, A |
Keywords: | pension de-risking;defined-benefit pension plans;pension freezing;pension buy-in;longevity swap |
Issue Date: | 6-Feb-2022 |
Publisher: | Elsevier |
Citation: | Li, Z. and . (2022) 'Pension de-risking choice and firm risk: Traditional versus innovative strategies', International Review of Financial Analysis, 81, 102064, pp. 1 - 17. doi: 10.1016/j.irfa.2022.102064. |
Abstract: | We examine the determinants of firms defined-benefit pension plan de-risking strategy choices and their impact on firm risk. We compile a hand-collected dataset for FTSE 350 firms for the period of 2009–2017. We find that hard freezing and pension buy-ins are more likely to be implemented when pension plans have longer investment horizons. In particular, pension plans that are exposed to higher investment risk are more likely to adopt pension buy-ins. Firms with larger capital expenditure and market capitalization are more likely to utilise innovative de-risking strategies (i.e. buy-in and longevity swap) in addition to traditional strategies (i.e. soft and hard freezing). Financially constrained firms are more likely to implement longevity swap over pension buy-ins. We also find that implementing pension de-risking strategies reduce firm risk. However, the effectiveness varies depending on the strategy with buy-ins having the largest impact in reducing risk. |
Description: | Data availability: Data will be made available on request. |
URI: | https://bura.brunel.ac.uk/handle/2438/28039 |
DOI: | https://doi.org/10.1016/j.irfa.2022.102064 |
ISSN: | 1057-5219 |
Other Identifiers: | ORCID iD: Alper Kara https://orcid.org/0000-0002-8560-0501 102064 |
Appears in Collections: | Dept of Economics and Finance Research Papers |
Files in This Item:
File | Description | Size | Format | |
---|---|---|---|---|
FullText.pdf | Copyright © 2022 The Authors. Published by Elsevier Inc. This is an open access article under the CC BY license (https://creativecommons.org/licenses/by/4.0/). | 622.13 kB | Adobe PDF | View/Open |
This item is licensed under a Creative Commons License