Pension accounting and research: A review

Abstract

This paper provides a review of empirical research on pension accounting. Empirical research on pension accounting has focused mainly on two issues, the value‐relevance of pension accounting information and earnings management in pension accounting. Further work has been done on the information efficiency of capital markets with regard to pension accounting information. I outline how research in these areas has evolved over the past decades and discuss the results that have been obtained. I also point out methodological issues. Furthermore, this review reveals that almost all existing studies on pension accounting are based on US accounting and capitalmarket data. I therefore discuss which effects national or regional differences in, for instance, pension regulation, taxation and funding, have on the production of pension accounting information by preparers, and on the processing of this information by analysts, investors and other users. Finally, I highlight that national institutional differences as well as ongoing changes to pension accounting standards raise interesting opportunities for future empirical research on pension accounting.

Keywords::

• pensions
• pension accounting
• value‐relevance
• earnings management

Notes

The author is Professor of International Accounting at Justus‐Liebig‐Universität Giessen, Germany. E‐mail: [email protected]‐giessen.de. He is grateful to Pauline Weetman, the editor, an anonymous referee, and Nicholas Barr, Paquita Davis‐Friday, Jan Fasshauer, Robert Hodgkinson, Wayne Landsman, Christopher Napier, Richard Macve, Brian Singleton‐Green, Donna Street, for helpful comments on drafts of this paper. Support from the ICAEW is gratefully acknowledged.