Abstract
Management's incentives regarding the selection among discretionary accounting practices have been the focus of academic research during the past decade. This dissertation investigates management's discretion as it relates to the employers' accounting for pensions. By performing a series of disaggregated analyses using cross-sectional and time-series data for the five-year period from 1980 to 1984, a common methodological problem in past literature is addressed. Five pension accounting decision variables were explored: (1) actuarial cost methods, (2) discount rates, (3) rates of return, (4) amortization periods, and (5) disclosure practices. The empirical analyses support the overall research hypothesis that managers' pension accounting decisions are systematically tied to financial (e.g., cash flow) and accounting-based (e.g., profitability) conditions of the firm. An investigation of managerial changes in pension accounting decisions suggests that, in general, such changes tended to result in a reduction in the magnitude of pension numbers. Moreover, the incidence and nature of these changes were associated with financial and/or accounting-based conditions of the firm. An analysis of managers' lobbying activity during the FASB's 13-year pension agenda suggests that managers who lobbied for non-pension issues also tended to lobby for pensions. This propensity to lobby, while related to firm size, precluded the inclusion of SIZE in estimated statistical models. The security market's reactions to (1) the Preliminary Views and (2) the March 1985 Exposure Draft, was significantly negative and positive, respectively. These reactions appear to be tied to the regulated industries, e.g., public utilities. The findings of this dissertation are important to accounting policy-setters who strive to regulate the behavior of managers via accounting standards. Moreover, various parties striving to monitor the reasonableness of accounting representations linked to pensions can gain insight as to the extent to which systematic patterns are underlying funding and accounting practices.
Campbell, Ronald Louis (1989). A cross-sectional and time-series investigation of managerial discretion regarding methods, rates, periods, and disclosure : the case of employers' accounting for pensions. Texas A&M University. Texas A&M University. Libraries. Available electronically from
https : / /hdl .handle .net /1969 .1 /DISSERTATIONS -1017706.