Open AccessThe Influence Of Pension Obligations And Other Postretirement Benefits On Primary Bond Pricing
Author(s) -
John J. Mahar,
G. Rodney Thompson
Publication year - 2011
Publication title -
journal of applied business research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.149
H-Index - 22
eISSN - 2157-8834
pISSN - 0892-7626
DOI - 10.19030/jabr.v14i2.5718
Subject(s) - pension , bond , business , actuarial science , primary market , balance sheet , corporate bond , economics , finance , paleontology , horse , stock market , biology
This paper investigates alternative measures of pension obligations and other postretirement benefits in an effort to assess their incremental value in determining risk premia of primary market corporate bonds. The results indicate that the information pertaining to pension liabilities (SFAS 87), and presented on the balance sheet, have not observable impact upon the firms primary market bond yields beyond that impounded in the firms bond rating. However, the information pertaining to other postretirement benefits (SFAS 81), and required in the footnotes to the financial statements, is found to be related to higher risk premia.