Journal of Accounting and Economics Vol. 30 No. 2 2000
The use of accounting flexibility to reduce labor renegotiation costs and manage earnings
Abstract
We investigate the determinants of discretionary SFAS 106 choices of non-regulated firms. We find that more unionized firms are more likely to use immediate recognition, consistent with incentives to reduce labor renegotiation costs. Immediate recognition is more prevalent among post-adoption plan modifiers, particularly if their transition obligation is large, consistent with incentives to increase future reported earnings. Immediate recognition, together with post-adoption benefit plan reduction, frees future income from the transition obligation amortization expense and adds a positive component as negative prior service costs are amortized. Immediate recognition is less prevalent among firms with higher potential debt contracting costs.
- DOI
- 10.1016/s0165-4101(01)00004-0
- Volume
- 30
- Issue
- 2
- Pages
- 187-208
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref