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U.S. Corporate Pension Expense And The 20072009 Financial Crisis: An Interrupted Time Series Analysis

Author

Listed:
  • Benjamin B. Boozer
  • Julie A. Staples
  • S. Keith Lowe
  • Robert J. Landry

Abstract

This research presents a model for predicting corporate pension expenses. By considering changes in financial statement variables that included operating profit margin, working capital levels, and cash levels the model explored directional impact on the dependent variable, pension expenses. Change was measured between 2004 and 2013 using the Kellough interrupted time series analysis to capture the effect of the 2007-2009 financial crisis. The analysis found that operating profit margin has a positive impact on pension expense levels, while higher levels of net working capital and cash have an inverse association. In finding the change variable of the interrupted time series event to have a positive sign, the analysis expands prior research in offering evidence that firms might not use pension expenses as a tool for earnings manipulation. Rather, firms appear to increase pension expense funding as a financial shock occurs but reduce during improving financial and economic conditions

Suggested Citation

  • Benjamin B. Boozer & Julie A. Staples & S. Keith Lowe & Robert J. Landry, 2016. "U.S. Corporate Pension Expense And The 20072009 Financial Crisis: An Interrupted Time Series Analysis," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 10(3), pages 29-38.
    • Handle: RePEc:ibf:ijbfre:v:10:y:2016:i:3:p:29-38
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    More about this item

    Keywords

    Pension Expense; Financial Crisis; Time Series;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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