The Economic Consequences of Accounting Standards: Evidence from Risk-Taking in Pension Plans

• 成果类型: Article
• 署名作者: Anantharaman, Divya; Chuk, Elizabeth C.
• 署名单位: Rutgers University System; Rutgers University New Brunswick; Rutgers University Newark; University of California System; University of California Irvine
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-51937
• 发表日期: 2018
• 页码: 23-51
• 关键词: asset allocation; INVESTMENT; incentives

摘要

Experts have long conjectured that pension accounting rules, by which pension expense depends on a managerial estimate that is directly tied to the riskiness of plan assets (i.e., the expected rate of return, or ERR, on plan assets), encourage risk-taking with pension investments. The recent passage of IAS 19, Employee Benefits (Revised) (hereafter, IAS 19R) eliminates the ERR and replaces it with a managerial estimate unrelated to plan asset riskiness (the discount rate). We demonstrate that a sample of Canadian firms affected by IAS 19R reduces risk-taking in pension investments post-IAS 19R, compared to a control sample of U.S. firms unaffected by IAS 19R. Therefore, removing firms' ability to recognize immediately in net income the expected higher returns from risk-taking (via a higher ERR) reduces their propensity for that risk-taking-providing some of the first empirical evidence on the economic consequences of eliminating the ERR-based pension accounting model.