diff --git a/lib/compress.js b/lib/compress.js
index cde4b6f7..3e5b524d 100644
--- a/lib/compress.js
+++ b/lib/compress.js
@@ -741,9 +741,10 @@ merge(Compressor.prototype, {
         });
 
         def(AST_SimpleStatement, function(){
-            if (this.body instanceof AST_Function) return false;
             return this.body.has_side_effects();
         });
+        def(AST_Defun, function(){ return true });
+        def(AST_Function, function(){ return false });
         def(AST_Binary, function(){
             return this.left.has_side_effects()
                 || this.right.has_side_effects();
@@ -1354,7 +1355,7 @@ merge(Compressor.prototype, {
         if (compressor.option("side_effects")) {
             if (self.expression instanceof AST_Function
                 && self.args.length == 0
-                && !self.expression.has_side_effects()) {
+                && !AST_Block.prototype.has_side_effects.call(self.expression)) {
                 return make_node(AST_Undefined, self).transform(compressor);
             }
         }