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The ownership of pension assets in a defined benefit pension plan is an unresolved issue in corporate finance. The issue is important because it defines the appropriate investment policy for a pension fund. In this paper, we summarize the ownership debate in the form of two mutually exclusive theories. We then focus on a recently popular event in pension finance, excess asset reversions. Our paper demonstrates the valuation effects associated with this event in a stochastic dominance framework. Under certain conditions, a reversion constitutes an expropriation of wealth from the participants and beneficiaries of the plan to the firm. Using data provided by the Pension Benefit Guaranty Corporation and the Center for Research in Security Prices tape, we examine the returns to the shareholders of 58 companies which conducted excess asset reversions between 1980 and 1984. Our results show that large abnormal returns accrued to these shareholders around the time of the reversion. These findings have implications both for the appropriate investment policy of pension funds and for public policy with respect to plan terminations. [ABSTRACT FROM AUTHOR]

The article combines contingent-claim analysis and the capital asset pricing model to derive empirically testable assertions concerning the effect of changes in time on the systematic risk of convertible bonds. The variable mean response random coefficient model with time trend is estimated. The results document a time trend for a sizeable portion of the convertible bonds. (Reprinted by permission of the publisher.)

The authors investigate the relationship between systematic risk and market power measured by Tobin's q, the ratio of market value to replacement cost. They demonstrate that there is a one-to-one relationship between the Tobin's q ratio and the Subrahmanyam and Thomadakis measure of market power. The theoretical model predicts that as a firm's market power increases, the systematic risk will, ceteris paribus, decrease. The empirical results ultimately confirm this negative association as predicted by Subrahmanyam and Thomadakis. (Reprinted by permission of the publisher.)

Corporate planning in the areas of investment, financing and actual production, including input and output decisions, are increasingly affected by inflationary factors, especially when such inflationary factors are uncertain. Research in this area indicates that most competitive companies have higher capital-labor ratios during times of uncertain inflation. Also, although the effects of inflation on output are difficult to define, the effects of inflation on input decisions are somewhat predictable.

Barriers to Entry, Concentration, and Tobin's q Ratio Abstract In a well-developed capital market, rents will be capitalized in the prices of the firm's outstanding securities. To avoid the difficulties [...]