Underinvestment vs. overinvestment: Evidence from price reactions to pension contributions

• 成果类型: Article
• 署名作者: Franzoni, Francesco
• 署名单位: Universita della Svizzera Italiana; Swiss Finance Institute (SFI)
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2008.06.004
• 发表日期: 2009
• 页码: 491-518
• 关键词: Financial constraints; corporate governance; Underinvestment; overinvestment

摘要

Mandatory contributions to defined benefit pension plans provide a unique identification strategy to estimate the market's assessment of the value of internal resources controlling for investment opportunities. The price decrease following a pension-induced drop in cash is magnified for firms that appear a priori more financially constrained, suggesting a negative effect of financing frictions on investment. In contrast, low control on managerial discretion attenuates the negative price reaction to contributions consistent with empire-building theories. While overinvestment seems to be the prevalent distortion in a panel of large firms, underinvestment appears to dominate in a sample that is more representative of the cross-section of listed companies. (C) 2008 Elsevier B.V. All rights reserved.