Pension plans and stock market value

The objective of the following Master?s Final Work is to test the existence of a direct effect between the funding level of a firm?s pension fund and its respective market price. As a relevant part of capital market, the study of pension assets and obligations is of particular importance to investors and market makers. Two distinct methods, a cross-sectional model and a ?variable-effect? event study will be used to assess the hypothesis that an increase in pension deficit is reflected in the market value of a firm by a decrease of equal magnitude. For the period between 2010 and 2015, for a selected sample of PSI Geral firms, both models seem to indicate that a firm?s market value is not reduced by an increase in pension deficit, and that pension liabilities are already integrated in corporate debt. These results suggest that shareholders do not take in account pension plan funding status when valuing the firm in a way contrasting with the normal evaluation of debt.