Pension accounting and corporate earnings: the world according to GAAP

Peter Fortune

No 06-2, Public Policy Discussion Paper from Federal Reserve Bank of Boston

Abstract: This study?s underlying premise is that current pension plan accounting has two important negative effects. First, it distorts the measurement of earnings and net worth in the short run, as well as the pattern of earnings over future periods. Second, this distortion can send incorrect signals to investors about a firm?s health, resulting in the mispricing of a firm?s outstanding debt and equity instruments. The author demonstrates how these distortions are introduced, examines the magnitude of the distortions, and discusses proposals for reform.

Keywords: Corporations - Accounting; Pensions (search for similar items in EconPapers)
Date: 2005
New Economics Papers: this item is included in nep-acc
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Citations: View citations in EconPapers (1)

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