Best paper award to Michael Kisser

Michael Kisser and his co-authors have been awarded the Best Corporate Finance Paper at the Annual Meeting of the Eastern Finance Association.

16.04.2015 - Astri Kamsvåg

On 10 April, Associate Professor Michael Kisser at the Department of Finance at NHH, and his co-authors, John Kiff and Mauricio Soto, were awarded the Best Corporate Finance Paper at the Annual Meeting of the Eastern Finance Association in New Orleans. The paper is entitled "Do pension plans manipulate pension liabilities?".

Abstract

We employ the fundamental details of U.S. pension funding law to test whether corporate defined benefit (DB) pension plans manipulate reported pension liabilities. Using a large sample of 11,963 plans, we find that reported pension liabilities are understated by approximately 10 percent. Most of the bias is driven by higher assumed discount rates, whereas a small fraction relates to the use of outdated longevity assumptions. The bias is particularly strong for underfunded plans. These findings are relevant for current policy discussions, as U.S. lawmakers have recently given more freedom to DB pension plan sponsors to reduce their reported pension liabilities.

Download the paper "Do pension plans manipulate pension liabilities?"