Market valuation of excess pension assets: Evidence from the market for corporate control

This study investigates the relation between excess pension assets and changes in shareholders' wealth associated with acquisition announcements. The analysis empirically investigates the pricing of excess pension assets as reflected in abnormal returns of target firms and acquiring firms and combined firm value. The evidence shows that excess pension assets are revalued in acquisitions, and the revaluation is captured entirely by the target firms shareholders. Finally, there is no strong evidence that transfers of wealth from labor to shareholders are prevalent in resisted takeovers.