Working Paper: NBER ID: w0480
Authors: Mark Gersovitz
Abstract: This paper examines the relationship between unfunded vested pension liabilities and the market value of a firm's shares. This relationship has important implications for the mechanism by which private pensions influence aggregate savings. Attention is paid to modeling the institutional determinants of this relation implied by ERISA legislation. These considerations require a nonlinear regression model with very special properties which are developed and discussed. Estimation results suggest that ERISA has had an important effect on the relation between unfunded benefits and firm value that previous investigations have neglected.
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JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| unfunded pension liabilities (G23) | market value (D46) |
| liabilities above PBGC threshold (G33) | market value (D46) |
| high unfunded liabilities (H69) | perception of poor management (M54) |