Internal Capital and Investment: Evidence from 2012 Pension Relief*

• 成果类型: Article
• 署名作者: Kubick, Thomas R.; Lockhart, G. Brandon; Robinson, John R.
• 署名单位: University of Nebraska System; University of Nebraska Lincoln; Clemson University; Texas A&M University System; Texas A&M University College Station
• 刊物名称: CONTEMPORARY ACCOUNTING RESEARCH
• ISSN/ISSBN: 0823-9150
• DOI: 10.1111/1911-3846.12677
• 发表日期: 2021
• 页码: 2034-2070
• 关键词: cash flow sensitivities; financing constraints; AGENCY COSTS; corporate; FIRMS; incentives

摘要

We use changes in mandatory pension funding to investigate the relation between internal financing constraints and incremental investment. Pension funding relief enacted in 2012 significantly reduced mandatory employer contributions to defined benefit pension plans. Prior to learning of the pension relief, firms disclosed their expected pension contributions under FAS 132R, which allows us to infer changes in investment plans in response to this unanticipated pension relief. Although our setting is pensions, our inferences contribute to the broader literature on how access to finance impacts the firm. We predict and find that pension relief resulted in increased nonpension investment in the year after enactment for financially constrained firms, and is stronger for constrained firms with greater pension underfunding. Our results are consistent with pension relief providing an important means of funding investment for financially constrained firms. Our identification strategy and results provide an important innovation to the literature examining the effect of financing constraints on investment.