RT Journal Article SR Electronic T1 Annuity Buyouts: An Empirical Analysis JF Special Issues FD Institutional Investor Journals SP 10 OP 20 DO 10.3905/sp.2017.2017.1.010 VO 2017 IS 1 A1 David R. Cantor A1 Frederick M. Hood III A1 Mark L. Power YR 2017 UL https://pm-research.com/content/2017/1/10.abstract AB Over the past several years, numerous companies have chosen to execute annuity buyouts as a method of de-risking their pension plans. The prevailing wisdom is that shareholders reward these transactions through increases in the share price when the transaction is executed. This logic is commonly employed by advisors and consultants to prompt plan sponsors to do an annuity buyout. We employ an event-study methodology to empirically test how the stock market reacts to annuity buyout announcements. We also examine whether the market reaction is different for small firms, those with high levels of credit risk, and large relative deal sizes. While our sample size is limited, we find for risky companies that the market views an annuity purchase as a negative signal and the share price is not rewarded. For large investment grade companies, the market views an annuity purchase more positively and the share price earns a small, but temporary, premium.