The role of institutional investors in pension risk transfers

Mary McCarthy (), Elisabeta Pana () and Andrew Weinberger ()
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Mary McCarthy: Central Connecticut State University
Elisabeta Pana: Central Connecticut State University
Andrew Weinberger: Central Connecticut State University

Journal of Economics and Finance, 2021, vol. 45, issue 3, No 4, 468 pages

Abstract: 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 (search for similar items in EconPapers)
JEL-codes: G1 G2 G3 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/s12197-020-09537-1

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