Open AccessCorporate Financial Statements And The Impact Of Health Care Costs Recognition
Author(s) -
V. Gopalakrishnan,
Timothy F. Sugrue
Publication year - 2011
Publication title -
journal of applied business research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.149
H-Index - 22
eISSN - 2157-8834
pISSN - 0892-7626
DOI - 10.19030/jabr.v7i3.6226
Subject(s) - accrual , leverage (statistics) , equity (law) , business , accounting , health care , sample (material) , actuarial science , finance , economics , economic growth , chemistry , earnings , chromatography , machine learning , computer science , political science , law
This paper empirically analyzes the economic consequences of a forthcoming rule on accounting for post-retirement obligations. This rule calls for the recognition of health care liabilities on the employers financial statements and prescribes that the cost associated with these obligations be accounted for on the accrual basis. Based on a sample of 103 firms, this study reports that compliance with this rule could have a dramatic impact on firms equity, leverage, income and key financial ratios.