Excess of the PBO over the ABO and hard pension freezes

Excess of the PBO over the ABO and hard pension freezes This paper examines the role of the excess of the projected benefit obligation (PBO) over the accumulated benefit obligation (ABO) in hard pension freezes. Using a sample of 109 firms that announced hard freezes during the period 2003–2008, I find that firms with a larger excess of the PBO over the ABO are more likely to hard freeze their pension plans. Furthermore, I document an average abnormal return of more than 1.2 % on the announcement day for the freeze firms. More importantly, the cumulative abnormal returns around pension freeze announcements are positively associated with the excess of the PBO over the ABO, and this positive association is more pronounced for firms with a higher level of institutional ownership, suggesting that institutional investors are more likely to understand the impact of hard pension freezes on firm value by incorporating pension information disclosed in the footnotes. Overall, this study provides evidence that firms shift away from defined benefit plans through pension freezes, and also highlights the importance of considering the excess of the PBO over the ABO in research on hard pension freezes. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Quantitative Finance and Accounting Springer Journals

Excess of the PBO over the ABO and hard pension freezes

Loading next page...
Springer US
Copyright © 2014 by Springer Science+Business Media New York
Finance; Corporate Finance; Accounting/Auditing; Econometrics; Operation Research/Decision Theory
Publisher site
See Article on Publisher Site


You’re reading a free preview. Subscribe to read the entire article.

DeepDyve is your
personal research library

It’s your single place to instantly
discover and read the research
that matters to you.

Enjoy affordable access to
over 12 million articles from more than
10,000 peer-reviewed journals.

All for just $49/month

Explore the DeepDyve Library

Unlimited reading

Read as many articles as you need. Full articles with original layout, charts and figures. Read online, from anywhere.

Stay up to date

Keep up with your field with Personalized Recommendations and Follow Journals to get automatic updates.

Organize your research

It’s easy to organize your research with our built-in tools.

Your journals are on DeepDyve

Read from thousands of the leading scholarly journals from SpringerNature, Elsevier, Wiley-Blackwell, Oxford University Press and more.

All the latest content is available, no embargo periods.

See the journals in your area

Monthly Plan

  • Read unlimited articles
  • Personalized recommendations
  • No expiration
  • Print 20 pages per month
  • 20% off on PDF purchases
  • Organize your research
  • Get updates on your journals and topic searches


Start Free Trial

14-day Free Trial

Best Deal — 39% off

Annual Plan

  • All the features of the Professional Plan, but for 39% off!
  • Billed annually
  • No expiration
  • For the normal price of 10 articles elsewhere, you get one full year of unlimited access to articles.



billed annually
Start Free Trial

14-day Free Trial