This study empirically tests whether freezing or closing a defined-benefit (DB)
pension plan increases the sponsoring company’s market value. The database
used for this study consists of 82 publicly traded U.S. companies that announced
freezes/closes in 2003–2007. On the basis of this extensive sample and
through a set of parametric and nonparametric tests under the event study
methodology, the study finds generally negative or insignificant abnormal
returns in stock prices that can be associated with the freeze/close events.
Little evidence supports the hypothesis that freezing or closing a DB plan
increases company value.