TY - JOUR
T1 - Setting expected rates of return on pension plan assets
T2 - New evidence on the influence of audit committee accounting experts
AU - Comprix, Joseph
AU - Guo, Jun
AU - Zhang, Yan
AU - Zhou, Nan
N1 - Publisher Copyright:
© 2017 Elsevier Ltd
PY - 2017/10
Y1 - 2017/10
N2 - This study examines whether having accounting experts on audit committees can mitigate the upward bias of expected rates of return (ERR) on pension plan assets documented in prior research. ERRs are found to be lower in firms with accounting expertise on their audit committees. These results are robust after controlling for variables from extant governance and pension research, and they suggest that audit committee accounting experts can help deter managers from setting higher ERRs on pension assets. While extant studies find that opportunistic setting of pension assumptions can be controlled through regulation, this paper provides new evidence on the influence of audit committee accounting experts on critical pension estimates. This newfound governance effect is different from and incremental to the regulation effect previously documented in the pension accounting literature.
AB - This study examines whether having accounting experts on audit committees can mitigate the upward bias of expected rates of return (ERR) on pension plan assets documented in prior research. ERRs are found to be lower in firms with accounting expertise on their audit committees. These results are robust after controlling for variables from extant governance and pension research, and they suggest that audit committee accounting experts can help deter managers from setting higher ERRs on pension assets. While extant studies find that opportunistic setting of pension assumptions can be controlled through regulation, this paper provides new evidence on the influence of audit committee accounting experts on critical pension estimates. This newfound governance effect is different from and incremental to the regulation effect previously documented in the pension accounting literature.
KW - Audit committee accounting expert
KW - Complex accounting estimate
KW - Expected rate of return (err)
KW - Pension accounting
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U2 - 10.1016/j.racreg.2017.09.008
DO - 10.1016/j.racreg.2017.09.008
M3 - Article
AN - SCOPUS:85033375161
SN - 1052-0457
VL - 29
SP - 159
EP - 166
JO - Research in Accounting Regulation
JF - Research in Accounting Regulation
IS - 2
ER -