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Appraising Commitments and Guarantees with Option Prices 1
Author(s) -
HANSEN SØREN LOENTOFT,
DOTHAN MICHAEL U.,
THOMPSON FRED
Publication year - 2007
Publication title -
public budgeting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.694
H-Index - 30
eISSN - 1540-5850
pISSN - 0275-1100
DOI - 10.1111/j.1540-5850.2007.00891.x
Subject(s) - pension , governmental accounting , state (computer science) , value (mathematics) , government (linguistics) , accounting , business , state government , fair value , economics , finance , actuarial science , local government , accounting information system , financial accounting , public administration , fund accounting , political science , computer science , linguistics , philosophy , algorithm , machine learning
Budgetary decision‐making is prone to myopia and to tunnel vision. Pension commitments suffer from both of these pathologies. In this case, we look closely at the State of Oregon's Public Employee Retirement System to show how the disclosure standards adopted by the Government Accounting Standards Board (GASB) help correct the fiscal vision of state and local governments and further conclude that postemployment commitments ought to be comprehensively examined in GASB's review of its accounting and reporting standards scheduled for 2008, ideally from the standpoint of present‐value budgeting.