The Effect of the Changes in Accounting Estimates of the Discount Rate to the Costs on Account of Creating Provisions

Staszel Anna () and Hołda Artur ()
Additional contact information
Staszel Anna: Cracow University of Economics, Cracow, Poland; ORCID: 0000-0002-4577-6262
Hołda Artur: Cracow University of Economics, Cracow, Poland; ORCID: 0000-0001-7744-2905

Financial Sciences. Nauki o Finansach, 2019, vol. 24, issue 1, 94-114

Abstract: The aim of the study is to answer the question of how a slight change in the actuarial assumptions (regarding the discount rate used) can affect the amount of the provisions, and consequently create the level of costs in the entity. In order to find the answer the financial statements of 148 stock-exchange-quoted companies from 2007 to 2014 (1184 financial statements in total) were analysed, determining whether the changes in long-term provisions for retirement benefits provisions (due to the use of a different discount) have a significant impact on the financial statements of these companies. The research involved the use of deductive-inductive research methods in the form of literature review and analysis of the content of financial statements. The obtained results indicate that the estimation of the discount rate significantly affects the levels of costs related to creating provisions, which may be an effective tool for manipulating the financial result.

Keywords: discount rate; long-term provisions; reliability of financial statements; estimations; true and fair view (search for similar items in EconPapers)
JEL-codes: M41 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.15611/fins.2019.1.06 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:vrs:finsci:v:24:y:2019:i:1:p:94-114:n:6

DOI: 10.15611/fins.2019.1.06

Access Statistics for this article

Financial Sciences. Nauki o Finansach is currently edited by Jacek Uchman

More articles in Financial Sciences. Nauki o Finansach from Sciendo
Bibliographic data for series maintained by Peter Golla ().