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Pension accrual management and research and development investment

Pension accrual management and research and development investment This study investigates whether discretion in reporting pension expenses mitigates research and development (R&D) manipulation. Using a sample of Japanese manufacturing firms during the fiscal years 2001–2011 where both pension costs and R&D expenditures have large impacts on the bottom‐line earnings, I find that higher discount rates are associated with higher R&D investment among firms in which pension expenses could have large impacts on reported earnings. I also find that this relationship is found only among firms in high‐tech industries. These results suggest that pension accrual management substitutes costly R&D manipulation that may hurt future competitive edge. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Accounting & Finance Wiley

Pension accrual management and research and development investment

Accounting & Finance , Volume 57 (4) – Jan 1, 2017

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References (28)

Publisher
Wiley
Copyright
Accounting and Finance © 2017 AFAANZ
ISSN
0810-5391
eISSN
1467-629X
DOI
10.1111/acfi.12185
Publisher site
See Article on Publisher Site

Abstract

This study investigates whether discretion in reporting pension expenses mitigates research and development (R&D) manipulation. Using a sample of Japanese manufacturing firms during the fiscal years 2001–2011 where both pension costs and R&D expenditures have large impacts on the bottom‐line earnings, I find that higher discount rates are associated with higher R&D investment among firms in which pension expenses could have large impacts on reported earnings. I also find that this relationship is found only among firms in high‐tech industries. These results suggest that pension accrual management substitutes costly R&D manipulation that may hurt future competitive edge.

Journal

Accounting & FinanceWiley

Published: Jan 1, 2017

Keywords: ; ;

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