The smoothing of pension expenses: a panel analysis

The smoothing of pension expenses: a panel analysis The main purpose of this paper is to utilize recent developments in panel data techniques to evaluate whether the smoothing of pension expenses is neutral in its long-term effect on reported earnings. Adopting a long-term perspective, the empirical analysis also identifies sources of potential deviations. Results suggest that the current smoothing mechanism tends to induce significant biases in the recognized pension expenses. For a majority of the sample firms, the tendency is to overstate the sponsoring firms’ earnings in the long run. To a large extent, such biases reflect the combination of both ineffective amortization of the deferred gains and losses and questionable latitude in pension rate discretions. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Quantitative Finance and Accounting Springer Journals

The smoothing of pension expenses: a panel analysis

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Publisher
Springer US
Copyright
Copyright © 2010 by Springer Science+Business Media, LLC
Subject
Finance; Corporate Finance; Accounting/Auditing; Econometrics; Operation Research/Decision Theory
ISSN
0924-865X
eISSN
1573-7179
D.O.I.
10.1007/s11156-010-0213-0
Publisher site
See Article on Publisher Site

References

  • Another look at the instrumental-variable estimation of error components models
    Arellano, M; Bover, O
  • Initial conditions and moment restrictions in dynamic panel data models
    Blundell, R; Bond, S
  • An evaluation of SFAS No. 130 comprehensive income disclosures
    Chambers, D; Linsmeier, TJ; Shakespeare, C; Sougiannis, T
  • Smoothing income in anticipation of future earnings
    Defond, ML; Park, CW
  • Industry costs of equity
    Fama, EF; French, KR

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