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The role of institutional investors in pension risk transfers

Author

Listed:
  • Mary McCarthy

    (Central Connecticut State University)

  • Elisabeta Pana

    (Central Connecticut State University)

  • Andrew Weinberger

    (Central Connecticut State University)

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.

Suggested Citation

  • Mary McCarthy & Elisabeta Pana & Andrew Weinberger, 2021. "The role of institutional investors in pension risk transfers," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 45(3), pages 451-468, July.
    • Handle: RePEc:spr:jecfin:v:45:y:2021:i:3:d:10.1007_s12197-020-09537-1
    DOI: 10.1007/s12197-020-09537-1
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    References listed on IDEAS

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    More about this item

    Keywords

    Institutional investors; Defined benefit plans; Risk transfers; Funding deficit;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services

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