The market response to pension plan terminations

Article Abstract:

The effect of pension plan termination announcements on stock returns is examined via analysis of replacement plans and shareholder anticipation of the termination. Ambiguous results from previous studies regarding positive market reactions to such announcements and appropriate measures of pension liability are clarified using this approach. Daily CRSP and Department of Labor data are used in an event-type model that incorporates bivariate probit estimates. The results indicate that stock returns at termination are determined by both the type of replacement plan and by market anticipation. The findings suggest that pension liability valuation are based more on investors' future salaries than current salaries.

Stock-exchange, Stock exchanges, Pensions, Defined benefit plans

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The effects of loads and expenses on open-end mutual fund returns

Article Abstract:

The relationship between the sales loads, annual expenses and returns of mutual funds was examined. For this study, 1,012 open-end mutual funds were investigated. Results showed that low expense funds performed better than high and very high expense funds. As for funds having similar expenses, the load funds did not generate returns that were enough to outweigh the load versus no-load funds. When divided by expense level, however, load funds having low expenses perform better than high expense, no-load funds.

Open-End Investment Funds, Management investment, open-end, Mutual Funds (Open End), Mutual funds, Open end mutual funds

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