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The Integration of Insurance and Taxes in Corporate Pension Strategy
Author(s) -
BICKSLER JAMES L.,
CHEN ANDREW H.
Publication year - 1985
Publication title -
the journal of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 18.151
H-Index - 299
eISSN - 1540-6261
pISSN - 0022-1082
DOI - 10.1111/j.1540-6261.1985.tb05022.x
Subject(s) - pension , asset allocation , capital (architecture) , pension insurance , capital market , economics , asset (computer security) , pension plan , business , actuarial science , monetary economics , finance , portfolio , computer security , archaeology , computer science , history
This paper examines the implications of the joint effects of insurance and taxes for the optimal corporate pension strategy. It is shown that neither the “mini‐max” nor the “maxi‐min” strategy advocated by previous authors is necessarily best in corporate pension management. In the presence of capital market imperfections, the analysis via a single‐period contingent‐claims model indicates that optimal corporate pension strategy in both asset‐allocation and funding decisions can be a noncorner interior solution.