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Earnings, Mergers And Acquisitions Under Pension Disclosure Standards

Author

Listed:
  • Jun Cai

    (Department of Economics and Finance, City University of Hong Kong, Hong Kong, China)

  • Yiyi Qin

    (Department of Economics and Finance, City University of Hong Kong, Hong Kong, China)

  • Anxing Wang

    (School of Finance, Shanghai University of Finance and Economics, Shanghai, China)

Abstract

We examine whether managers alter earnings management behavior, in the case of mergers and acquisitions, following the introduction of new pension disclosure standards under SFAS 132R, effective December 15, 2003. We find managers do set lower rate of return (ERR) assumptions on pension assets under the new pension accounting standards. However, managers also become more sensitive to opportunities to boost reported earnings by inflating ERR. Managers more actively exploit such opportunities when pension assets are large relative to earnings measures, i.e., when potential gains from earnings management are large.

Suggested Citation

  • Jun Cai & Yiyi Qin & Anxing Wang, 2018. "Earnings, Mergers And Acquisitions Under Pension Disclosure Standards," Advances in Decision Sciences, Asia University, Taiwan, vol. 22(1), pages 137-179, December.
    • Handle: RePEc:aag:wpaper:v:22:y:2018:i:1:p:137-179
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    References listed on IDEAS

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    More about this item

    Keywords

    defined benefit pension plans; earnings management; mergers and acquisitions; pension assumptions; disclosure standards;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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