An Event Study Analysis of Statement of Financial Accounting Standards No. 158 | Zendy

Abraham N. Fried | Zendy

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An Event Study Analysis of Statement of Financial Accounting Standards No. 158

Author(s) -

Abraham N. Fried

Publication year - 2013

Publication title -

accounting and finance research

Language(s) - English

Resource type - Journals

eISSN - 1927-5994

pISSN - 1927-5986

DOI - 10.5430/afr.v2n2p45

Subject(s) - balance sheet , pension , pension plan , accounting , relocation , balance (ability) , income statement , statement (logic) , business , actuarial science , financial accounting , event study , stock market , stock (firearms) , net income , financial statement , economics , finance , accounting information system , law , political science , psychology , audit , context (archaeology) , horse , computer science , engineering , biology , paleontology , programming language , mechanical engineering , neuroscience

This study examines the economic consequences of the Statement of Financial Accounting Standards (SFAS) No. 158 requirement to recognize previously disclosed net pension and postretirement benefit obligations on the balance sheet. The study documents a negative stock price reaction around the release of the SFAS No. 158 Exposure Draft. Additionally, the results indicate that the market reaction varies cross-sectionally with the magnitude of the balance sheet adjustment required by SFAS No. 158 and is driven by the other postretirement plan adjustment rather than the pension plan adjustment. The findings have important implications for the recognition versus disclosure debate because they document a significant market reaction to the relocation of already disclosed information from the financial statements footnotes to the balance sheet.

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