EARNINGS, MERGERS AND ACQUISITIONS UNDER PENSION DISCLOSURE STANDARDS
Yiyi Qin and
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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
Advances in Decision Sciences, 2018, vol. 22, issue 1, 137-179
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.
Keywords: defined benefit pension plans; earnings management; mergers and acquisitions; pension assumptions; disclosure standards (search for similar items in EconPapers)
JEL-codes: G34 J32 M41 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:aag:wpaper:v:22:y:2018:i:1:p:137-179
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