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Corporate Pensions and the Maturity Structure of Debt

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Listed:
  • Yijia Lin
  • Sheen Liu
  • Jifeng Yu

Abstract

In this article, we investigate the role of pension obligations, the most significant off‐balance‐sheet item, in determining corporate debt maturity and spreads. We begin by showing a significant and robust positive relationship between pension liabilities and corporate short‐term debt ratio. We also find that more pension obligations cause a significant increase in the cost of debt, but this effect is mitigated by short‐maturity debt. Overall, our study shows that short‐term debt can reduce asymmetric information costs related to pensions.

Suggested Citation

  • Yijia Lin & Sheen Liu & Jifeng Yu, 2019. "Corporate Pensions and the Maturity Structure of Debt," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 86(2), pages 315-350, June.
    • Handle: RePEc:bla:jrinsu:v:86:y:2019:i:2:p:315-350
    DOI: 10.1111/jori.12215
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