Unfunded pension liabilities and sponsoring firm credit risk: an international analysis of corporate bond spreads

This paper tests empirically whether pension information derived by corporate pension accounting disclosures is priced in corporate bond spreads. The model represents a hybrid of more traditional accounting ratio-based models of credit risk and structural models of bond spreads initiated by Merton (1974). The model is fitted to 5 years of data from 2002 to 2006 featuring companies from the US and Europe. The paper finds that while unfunded pension liabilities are priced in the overall sample, they are not priced as aggressively as traditional leverage. Furthermore, an extended model shows that the pension–credit risk relation is most evident in the US and Germany, where unfunded pension liabilities are priced more aggressively than traditional forms of leverage. No pension–credit risk relation is found in the other countries sampled, notably the UK, Netherlands and France.

Unfunded Pension Liabilities and the Corporate CDS Market

This article examines the impact of pension deficits on default risk as measured by the premia on corporate credit default swaps (CDS). We find highly significant evidence that unfunded pension liabilities raise one- and five-year CDS premia. However, this relation is not homogeneous across countries, with the U.S. CDS market leading its European counterparts in the pricing of defined-benefit pension risk.

UK: general - UK enforcement.

Reports that the Competition and Markets Authority (CMA) began operations in "shadow form" on October 1, 2013 prior to it taking over the mandates of the Competition Commission and the Office of Fair Trading in April 2014. Outlines the CMA's draft guidance, issued for consultation on September 17, 2013, on prosecutions for the cartel offence. Presents links to other CMA communications.

The Dark Side of Nudging: The Ethics, Political Economy, and Law of Libertarian Paternalism

Libertarian paternalism, as advanced by Cass Sunstein, is seriously flawed, but not primarily for the reasons that most commentators suggest. Libertarian paternalism and its attendant regulatory implications are too libertarian, not too paternalistic, and as a result are in considerable tension with ‘thick’ conceptions of human dignity. We make four arguments. The first is that there is no justification for a presumption in favor of nudging as a default regulatory strategy, as Sunstein asserts. It is ordinarily less effective than mandates; such mandates rarely offend personal autonomy; and the central reliance on cognitive failures in the nudging program is more likely to offend human dignity than the mandates it seeks to replace. Secondly, we argue that nudging as a regulatory strategy fits both overtly and covertly, often insidiously, into a more general libertarian program of political economy. Thirdly, while we are on the whole more concerned to reject the libertarian than the paternalistic elements of this philosophy, Sunstein’s work, both in Why Nudge?, and earlier, fails to appreciate how nudging may be manipulative if not designed with more care than he acknowledges. Lastly, because of these characteristics, nudging might even be subject to legal challenges that would give us the worst of all possible regulatory worlds: a weak regulatory intervention that is liable to be challenged in the courts by well-resourced interest groups. In such a scenario, and contrary to the ‘common sense’ ethos contended for in Why Nudge?, nudges might not even clear the excessively low bar of doing something rather than nothing. Those seeking to pursue progressive politics, under law, should reject nudging in favor of regulation that is more congruent with principles of legality, more transparent, more effective, more democratic, and allows us more fully to act as moral agents. Such a system may have a place for (some) nudging, but not one that departs significantly from how labeling, warnings and the like already function, and nothing that compares with Sunstein’s apparent ambitions for his new movement.

New Organizational Leadership: Nonstate Actors in Global Economic Governance

States and international organizations have found irresistible cause in a globalizing world to coopt nonstate actors (NGOs, private standard setters and so forth) to manage the manifold problems arising under their stretched mandates and resources. The pooling of capacities in the pursuit of common goals seems perfectly sensible. Yet although the strategy of cooptation has become a policy of choice, policy makers often lack full knowledge of its implications. As Philip Selznick first showed, cooptation can have unintended consequences, shifting leadership from one organization to another. We place this fertile insight in a better specified analytical framework. That is, one capable of explaining when and how leadership shifts occur and where the status quo leaders will remain at the helm. Using original interview data and structured focused comparisons to test the framework, we reveal dramatic variation in leadership changes following the cooptation of outside actors in global financial and environmental governance.