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Pension accrual management and research and development investment

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  • Takafumi Sasaki

Abstract

This study investigates whether discretion in reporting pension expenses mitigates research and development (R&D) manipulation. Using a sample of Japanese manufacturing firms during the fiscal years 2001–2011 where both pension costs and R&D expenditures have large impacts on the bottom†line earnings, I find that higher discount rates are associated with higher R&D investment among firms in which pension expenses could have large impacts on reported earnings. I also find that this relationship is found only among firms in high†tech industries. These results suggest that pension accrual management substitutes costly R&D manipulation that may hurt future competitive edge.

Suggested Citation

  • Takafumi Sasaki, 2017. "Pension accrual management and research and development investment," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 57(4), pages 1127-1147, December.
    • Handle: RePEc:bla:acctfi:v:57:y:2017:i:4:p:1127-1147
    DOI: 10.1111/acfi.12185
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    References listed on IDEAS

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    1. Qi Yang & Dejun Wu, 2020. "Does an item change trigger earnings management? Evidence from asset disposal income in China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(5), pages 4593-4619, December.

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