Bridging Financial Reporting Research and Policy: A Discussion of ‘The Impact of Accounting Standards on Pension Investment Decisions’

Abstract

Barthelme, Kiosse, and Sellhorn (2018. The impact of accounting standards on pension investment decisions. European Accounting Review. doi:10.1080/09638180.2018.1461670) examine the real effects of pension accounting regulation and provide evidence consistent with the claim that recent changes in financial reporting rules affect pension asset allocation decisions. Their study offers an interesting opportunity to highlight the importance of evidence-based policymaking in the field of financial reporting. I discuss some empirical challenges that the authors face to causally identify the effects they examine to show how a closer cooperation between academia and regulators can enable researchers to overcome identification challenges and help produce even more policy-relevant research.

Keywords:

• Regulation
• Evidence-based policymaking
• Pension asset allocation
• Real effects

JEL classifications:

• G18
• G38
• K22
• L51
• M48

Acknowledgments

I appreciate the helpful discussions with Hervé Stolowy (the Editor), Richard Barker, Maria Correia, Joachim Gassen, Bjørn Jørgensen, Paraskevi Vicky Kiosse, Thorsten Sellhorn, Ann Tarca, and conference participants at the 2017 IASB Research Forum. I am grateful to the London School of Economics for financial support.

ORCID

Stefano Cascino http://orcid.org/0000-0002-6703-741X

Notes

1 An interesting example in this respect is the 2005–2007 pilot program which was run by the SEC to provide evidence on the effects of removing short-sale restrictions. Like in a RCT, the SEC randomly selected one-third of the Russell 3000 companies and exempted them from short-sale restrictions previously in place (so called ‘uptick rule’). The exempted companies were effectively the ‘treated’ subjects in the experiment, whereas the other companies served as ‘control’ subjects.

Additional information

Funding

This work was supported by the London School of Economics and Political Science.