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Japanese Corporate Pension Plans and the Impact on Stock Prices

Author

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  • Kazuo Yoshida
  • Yutaka Horiba

Abstract

This study focuses on the stock market impact of Japanese corporate decisions to adopt pension plans. Implementing corporate pension plans in Japan is complicated because they are heavily regulated by the government and the traditional lump‐sum‐only severance benefit plans already exist, requiring interfacing newly adopted plans with existing ones. Using the GARCH estimation method, the market model applied in this article for the relatively long period 1975–1995 yields evidence that suggests that the stock market responds to some of the more specific characteristics of adopted plans. Alternative specifications of the pension “event” also suggest that relatively little of the market impact comes from public announcements about pension adoption occasioned by the release of a firm's financial statement.

Suggested Citation

  • Kazuo Yoshida & Yutaka Horiba, 2003. "Japanese Corporate Pension Plans and the Impact on Stock Prices," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 70(2), pages 249-268, June.
    • Handle: RePEc:bla:jrinsu:v:70:y:2003:i:2:p:249-268
    DOI: 10.1111/1539-6975.00059
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    Cited by:

    1. Moshe A. Milevsky & Keke Song, 2010. "Do Markets Like Frozen Defined Benefit Pensions? An Event Study," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 77(4), pages 893-909, December.
    2. Kazuo Yoshida & Yutaka Horiba, 2012. "Determinants of Defined-Contribution Japanese Corporate Pension Coverage," The Japanese Accounting Review, Research Institute for Economics & Business Administration, Kobe University, vol. 2, pages 33-47, December.
    3. Goto, Shingo & Yanase, Noriyoshi, 2021. "Pension return assumptions and shareholder-employee risk-shifting," Journal of Corporate Finance, Elsevier, vol. 70(C).

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