IDEAS home Printed from https://ideas.repec.org/p/tky/jseres/99cj19.html
   My bibliography  Save this paper

"Firms' Choice of Pension Discount Rate and Stock Prices"(in Japanese)

Author

Listed:
  • Takashi Obinata

    (Faculty of Economics, University of Tokyo)

Abstract

Under present financial accounting standards, in Japan and in U. S, the firms can choose the pension discount rate, that is used only for earnings measurement, at their discretion. This paper investigates, first, what factors affect the choice of the pension discount rate. The sample firms in this paper lowered their discount rates, when market interest rate declined in 1990's, more slowly than the trend of the markets. The causes of this delay are analyzed by Logit model. Regression results show that, given declining interest rate, the significant factor affecting the firms' choice is not leverage, but profitability (return-to-equity: ROE). Second, this research investigates empirically how stock price reflects the pension discount rate chosen by the firm. Both the unamortized pension obligations and the periodic pension costs of the firm are positively associated with its stock price. However, the coefficients of the firms, whose discount rates are higher than median, are smaller significantly than that of the firms choosing lower rates. Those coefficients are not significantly different from zero. This asymmetry result is consistent with the first point in this paper, concerning the firm's motives of choosing the pension discount rate.

Suggested Citation

  • Takashi Obinata, 1999. ""Firms' Choice of Pension Discount Rate and Stock Prices"(in Japanese)," CIRJE J-Series CIRJE-J-19, CIRJE, Faculty of Economics, University of Tokyo.
  • Handle: RePEc:tky:jseres:99cj19
    as

    Download full text from publisher

    File URL: http://www.cirje.e.u-tokyo.ac.jp/research/dp/99/cj19/contents.htm
    Download Restriction: no

    References listed on IDEAS

    as
    1. Grothe, Oliver & Korniichuk, Volodymyr & Manner, Hans, 2014. "Modeling multivariate extreme events using self-exciting point processes," Journal of Econometrics, Elsevier, vol. 182(2), pages 269-289.
    2. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-438, July.
    Full references (including those not matched with items on IDEAS)

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tky:jseres:99cj19. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CIRJE administrative office). General contact details of provider: http://edirc.repec.org/data/ritokjp.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.