The elusive relation between pension discount rates and deficits
Seth Armitage,
Ronan Gallagher and
Jiaman Xu
Journal of Business Finance & Accounting, 2023, vol. 50, issue 7-8, 1101-1127
Abstract:
The relation between defined‐benefit (DB) pension discount rates and funding status is more complex than it might first appear. Existing evidence suffers from estimation biases that make precise inference unreliable. We document the biases and quantify their impact on inference in relation to corporate window‐dressing of DB funding status. Our empirical evidence from the United Kingdom suggests that pension sponsors use discretion in the choice of pension discount rate not only to reduce reported deficits but also to reduce reported surpluses.
Date: 2023
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https://doi.org/10.1111/jbfa.12658
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Persistent link: https://EconPapers.repec.org/RePEc:bla:jbfnac:v:50:y:2023:i:7-8:p:1101-1127
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