Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
1006648 | Research in Accounting Regulation | 2014 | 5 Pages |
Abstract
Previous research finds that firms increase their assumed discount rates to minimize their reported pension benefit obligation. This paper demonstrates that firms whose pension plans have short durations lower their discount rates (rather than increase them), since a lower discount rate decreases their pension expense. These results are especially relevant in the present climate of low interest rates and more firms freezing their defined benefit pension plans, thereby shortening the duration of their obligations. Given its importance in shaping management motivation we believe that firms should be required to disclose the duration of their future obligations.
Keywords
Related Topics
Social Sciences and Humanities
Business, Management and Accounting
Accounting
Authors
Abraham Fried, Paquita Davis-Friday, Harry Z. Davis,