Use this URL to cite or link to this record in EThOS: http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.732663
Title: Essays on the economic consequences of international pension accounting standard IAS19
Author: Vu, Tuan Hung
ISNI:       0000 0004 6498 5363
Awarding Body: University of Exeter
Current Institution: University of Exeter
Date of Award: 2017
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Abstract:
This thesis examines the economic consequences of the adoption of international pension accounting standard IAS19 Revised (IAS19R) on pension asset allocation decisions by applying a difference-in-differences with propensity score matching method. The publication of IAS19R in 2011 marked a fundamental change to pension reporting in financial statements. In particular, it had a significant impact on (1) how sponsor firms recognise net pension assets/liabilities on the balance sheet, (2) the calculation and recognition of pension expenses, (3) the presentation of re-measurement (actuarial gains and losses), treatment of which had been heavily debated by academics and practitioners, and (4) disclosure requirements for pension schemes, which had been criticised as “excessive” under IAS19. This research examines the “real effect” of IAS19R adoption on management investment decisions. Using a difference-in-differences with propensity score matching method, the results suggest that, on average, UK sponsor firms affected by IAS19R have reduced their risk taking in pension investments post-IAS19R, both over time and compared with a control sample of unaffected US firms (matched by propensity score matching). The results of sensitivity analysis also suggest that UK sponsor firms tried to avoid the expensive liquidity costs of asset re-allocation by switching their pension plan asset allocations gradually during the period around the publication and adoption of IAS19R. Furthermore, the outcomes of sensitivity tests suggest a positive relationship between equity investment levels, and firms’ leverage and cash flow risk, consistent with the “risk-shifting” hypothesis documented in the previous literature. The thesis also applies a manual textual analysis on the comment letters sent by industrial firms to the IASB to provide their opinions on the IAS19R Exposure Draft. The analysis describes and tabulates the arguments raised by these firms on three main amendment areas of IAS19: recognition, presentation and disclosure. Based on this description, this part aims to motivate the empirical research mentioned previously and shed light on the other potential consequences of IAS19R adoption. These consequences include: the management of funding might be driven by accounting rules rather than management rules; the increasing volatility of balance sheet; de-risking in the pension plan portfolio following the adoption of IAS19R; the diminishing of financial statement “true and fair view” and its usefulness due to the abolition of expected rate of return and excessive requirements on pension disclosure. Furthermore, the study also suggests that the lobbying behaviour of these firms on the standard setting process is consistent with the predictions of Positive Accounting Theory.
Supervisor: Billings, Mark Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID: uk.bl.ethos.732663  DOI: Not available
Keywords: Pension Accounting ; Pension Asset Allocation ; IAS19
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