The Information Content of Corporate Pension Funding Status in Japan
Date of Original Version
This paper tests if a firm's pension funding ratio (pension assets/PBO) reveals the management's private information about the firm's operation when the firm can exercise discretion in pension funding. The lax enforcement of pension funding rules and the prevalence of management forecasts make Japanese firms an ideal testing ground. We show that, among firms with large business uncertainty, large accruals, or high effective tax rates, the pension funding ratio predicts the firm's management forecast errors significantly beyond conventional control variable and the effects of pension accounting management. However, the stock market does not appear to incorporate this information immediately.
Journal of Business Finance and Accounting
Goto, Shingo, and Noriyoshi Yanase. "The Information Content of Corporate Pension Funding Status in Japan." Journal of Business Finance and Accounting 43, 7-8 (2016): 903-949. doi:10.1111/jbfa.12197.