Earnings Mergers and Acquisitions Under Pension Disclosure Standards

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Original languageEnglish
Pages (from-to)1-42
Number of pages42
Journal / PublicationAdvances in Decision Sciences
Online published16 Oct 2018
Publication statusPublished - Dec 2018


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.

Research Area(s)

  • defined benefit pension plans, earnings management, mergers and acquisitions, pension assumptions, disclosure standards

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