Spinoff-terminations and the value of pension insurance
Article Abstract:
Under the Employee Retirement Income Security Act of 1974, the Pension Benefit Guarantee Corporation (PBGC) was established to insure employee pension and retirement benefits. Since current laws allow corporations to terminate pension plans, forcing the PBGC to pay benefits to employees that exceed its abilities to raise funds, it has been suggested that the law be revised, such that pension trust terminations be disallowed except upon the bankruptcy of the sponsoring company. Models of the PBGC's insurance liability are developed for current law and for the bankruptcy requirement noted. The discussion of the PBGC's insurance valuation models, following their presentation, raises three points which question the importance of the research.
Publication Name: Journal of Finance
Subject: Business
ISSN: 0022-1082
Year: 1985
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Excess asset reversions and shareholder wealth
Article Abstract:
Pension funds since 1974 are invested according to two criteria: they are either part of the company's assets or they constitute separate assets from the sponsoring firm. An empirical study of 58 firms shows that there is a substantial difference in the way these funds are invested any administered. Findings support the separation framework as being more profitable for both employees and the company's shareholders. Data were provided by the Pension Benefit Guaranty and the Center for Research in Security Prices, and covers the period from 1980 to 1984.
Publication Name: Journal of Finance
Subject: Business
ISSN: 0022-1082
Year: 1986
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Valuation and optimal exercise of the wild card option in the Treasury bond futures market
Article Abstract:
The wild-card option arises every trading day at 2 p.m., when the market closes. Between 2 p.m. and 8 p.m., traders can deliver if they choose to, creating a short position that affect futures contracts. This research focuses on the wild-card option through the use of a valuation model. The valuation model shows that beginning on day one of any month there is a progressive devaluation, which by the end of the month will approach zero.
Publication Name: Journal of Finance
Subject: Business
ISSN: 0022-1082
Year: 1986
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