外文翻译采用财务会计准则第158号当年养老金调整转型及其他综合收益内容的价值相关性

1、外文翻译-采用财务会计准则第158号当年养老金调整转型及其他综合收益内容的价值相关性 本科毕业论文（设计）外 文 翻 译外文题目 Value-relevance of Pension Transition Adjustments and Other Comprehensive Income Components in the Adoption Year of SFAS No. 158 外文出处 Review of Quantitative Finance and Accounting 外文作者 Santanu Mitra and Mahmud Hossain 原文：Value-relevanc

2、e of Pension Transition Adjustments and Other Comprehensive Income Components in the Adoption Year of SFAS No. 158In the present study, we examine the value-relevance of pension transition adjustments and other comprehensive income OCI components in the initial adoption year of Statement of Financia

3、l Accounting Standard SFAS 158Employers Accounting for Defined Benefit Pension and Other Postretirement Plans. Using a sample of 697 Standard and Poor S&P firms with the fiscal year ending on December 31, 2006, we perform several cross-sectional regression analyses to test the value-relevance of tra

4、nsition adjustments and OCI components in presence of various earnings measures. The results indicate that there is a negative relationship between both the level and change in stock returns and the magnitude of pension transition adjustments. We also find earnings measures and some OCI components a

5、re significantly associated with stock returns. When analyzed separately, we find our main results are mostly confined to the sample large S&P 500 firms. We do not find any result for the S&P mid-cap and small-cap firms. The overall results suggest the stock market negatively reacts to the adverse i

6、mpact of SFAS #158 pension transition adjustments on net worth and future cash flows when the impact is substantial in its magnitude in dollar terms. The study further provides useful insight into the information processing by documenting that the market evaluates accounting information more effecti

7、vely when such information is recognized in the financial statements rather than disclosed only in the financial footnotes.This study examines the value-relevance of the transition adjustments relating to pension and post-retirement benefits and of other comprehensive income OCI 1 components followi

8、ng the adoption of Statement of Financial Accounting Standard SFAS No. 158Employers Accounting for Defined Benefit Pension and Other Postretirement Plans,which amends the earlier pension accounting rules under SFAS Nos. 87, 88, 106 and 132R.SFAS 158 requires companies to: 1 fully recognize the over

9、or under-funded status of pension and other post-retirement benefits under defined benefit plans on the balance sheets on the basis of projected benefit obligations PBO and fair value of plan assets and 2 measure the assets and liabilities as of the end of the fiscal year. Companies need to aggregat

10、e the status of all over-funded under-funded plans and recognize the amount as an asset liability in statements of financial position. The publicly traded companies are required to apply the provisions of SFAS 158 and the related recognition rules to their financial statements for the fiscal year en

11、ding after December 15, 2006.2 Financial Accounting Standards Committee of American Accounting Association has opined that SFAS 158 is a significant improvement over current reporting. Recognizing the funded status of pension plans in the balance sheet would better provide information about the unde

12、rlying economics of a companys pension and other post employment benefits OPEB plans. This would eliminate the need to make necessary reconciliation of pension information on the basis of disclosure in financial footnotes,which many financial statement users do not see or understand.Before adopting

13、SFAS 158, the over or under funded status of the pension and postretirement benefit plans were disclosed in the financial footnotes. While issuing SFAS 158,Financial Accounting Standard Board FASB argued disclosure of the under/over funded status of defined benefit plans in financial footnotes cause

14、d users problems in assessing an employers financial position and its ability to satisfy plan obligations. Footnote disclosure is not a proper substitute for recognition of the funding status in the statement of financial position Hurtt et al. 2007 . But as a result of SFAS 158 rules, the net pensio

15、n assets or liabilities will move up to the financial statements from a complex and detailed footnote tothe balance sheet, a change which is expected to improve the clarity of reported information.SFAS 158 further requires business entities to record previously unrecognized gains or losses, prior se

16、rvice costs or credits and any transition assets or obligations as a direct adjustment net of tax to accumulated other comprehensive income AOCI for the fiscal year ended after December 15, 2006.3 The total adjustment amount reported as a separate AOCI item in stockholders equity is termed as pensio

17、n transition adjustment in this paper. This is a lump-sum one-time adjustment in stockholders equity to make the net worth of a corporation fully reflecting the effect of the funded status of the plan. So, due to the retroactive computation of additional charges/credits, SFAS 158 transition adjustme

18、nts could have substantial implications for the net worth and future cash flows of implementing firms. In fact, various professional agencies anticipated that the SFAS 158 transition adjustments would significantly increase liabilities accompanied by considerable erosion of stockholders equity of th

19、e reporting entities.4 Investors are now better able to assess the future cash flow consequence of increased liabilities/assets that are reflected by the transition adjustments and recognized in the financial statements. In this respect, SFAS 158 adjustment is expected to have a major valuation impl

20、ication for reporting entities in its initial adoption year, 2006. In Appendix, we provide examples of the dollar effect of retrospective pension transition adjustment and its effect on the financial statements for the fiscal year end December 31, 2006 for five large-cap sample firms, e.g., Boeing C

21、orp., Chevron Corp., Lockheed Martin Corp., Caterpillar Inc. and Kraft Foods, Inc., operating in different industries.The current study focuses on how the capital market evaluates the potential economic effect of change in net worth caused by pension transition adjustments on future cash flows of th

22、e reporting entities. We are motivated to undertake an association study on the premise that it would produce useful insights into the information processing by the market with respect to pension transition adjustments and OCI components in the SFAS 158 adoption year, especially when the related acc

23、ounting information is directly recognized in the financial statements rather than merely disclosed in financial footnotes and when such adjustment makes the associated future cash flow consequence more precise and visible for the investors. We examine whether the capital market evaluates the pensio

24、n transition adjustments made by the SEC registrants in the adoption year of SFAS 158 while incorporating information about reported earnings and OCI components in pricing equity securities. If the pension transition adjustments have the effect of reducing stockholders equity accompanied by a declin

25、e increase in assets liabilities for previously underfunded plans, we expect that the transaction effect of SFAS 158 will be to reduce firm value. However, if the pension plans are over-funded, the transition adjustment will have the opposite effect, which is to increase stockholders equity accompan

26、ied by an increase in assets or decrease in liabilities. In this analysis, we also examine the value-relevance of OCI components in the SFAS 158 adoption year as a complement to the mixed evidence produced by prior research about their implication for stock price changes.The test results suggest, in

27、 general, the stock market negatively reacts to the magnitude of pension transition adjustments. We find that cross-sectional differences in both the level and change in stock returns are significantly negatively associated with the absolute value of pension transition adjustments in presence of OCI

28、 components and other earnings measures. However, such inverse relationship is mainly confined to the sample standard and poor S&P large 500 firms. Some OCI components and earnings measures in the analyses are also consistently significant at different levels. However, we do not find any association

29、 between the stock returns and transition adjustments for the sample S&P midcap and small-cap firms. Based on the results, we suggest capital market incorporates the pension transition adjustment information in stock prices especially for the large-cap firms in the initial adoption year. The sheer m

30、agnitude of the adjustment amounts makes a substantial difference in the information value of adjustment. Therefore, the market valuation of its adverse effect on the net worth and future cash flows of the SEC registrants in the initial adoption year. The result also supports the notion that recogni

31、tion of accounting information in financial statements rather than only disclosure in financial footnotes increases its usefulness to users.This study demonstrates investors could evaluate the potential effect of the previously unrecognized pension and post-retirement liability/asset adjustments tha

32、t are reported in financial statements as a one-time adjustment. In this respect, it also shows that the new SFAS No. 158 increases the usefulness of pension and post-retirement benefit information to financial statement users by requiring companies to recognize the full-funded status of their defin

33、ed benefit plans in financial statements.The prior research on recognition versus disclosure of information in financial statements produce mixed evidence. Some studies document financial statement users also incorporate information disclosed in financial footnotes e.g., Aboody 1996; Davis-Friday et

34、 al. 1999; Gordon and Joos 2004 . Other studies find evidence that footnote disclosure of pension and postretirement benefit obligations are value-relevant to investors e.g., Barth 1991; Choi et al. 1997; Fairfield and Whisenant 2001 . However, Hirst and Hopkins 1998 show that professional analysts

35、could discover earnings management more easily when earnings components are clearly reported in an income statement rather than when further analysis is required. They indicate disclosure versus recognition is an important issue with respect to the valuation implication of comprehensive income items

36、. Hirst et al. 2004 further document recognition rather than disclosure of fair estimates is more likely to enable equity analysts to reach the appropriate risk and value judgment decisions. Ahmed et al. 2006 find recognized derivative fair values are associated with stock prices, whereas the disclo

37、sed fair values are not. Finally, Libby et al. 2006 show in both stock compensation and lease setting, audit partners require greater correction of misstatements in recognized amounts than in equivalent disclosed amounts. They suggest the actual choice to disclose rather than to recognize can reduce

38、 information reliability.Several prior studies document investors use pension information to price equity shares e.g., Landsman 1986; Barth 1991; Barth et al. 1992; Amir 1993 . Some other studies however, find such information is not fully impounded in stock prices. Landsman and Ohlson 1990 suggest

39、market under-reacts to the pension information. Hand et al. 1997 find little evidence that differences in valuation multiples exist on the basis of the funding status of the pension and postretirement benefit plans. Furthermore, Picconi 2006 suggests analysts do not explicitly incorporate the inform

40、ation from pension plan parameter changes as disclosed in pension footnotes into their initial forecasts so that these changes predict future earnings surprises. He finds analysts and investors only gradually incorporate the pension information into prices and forecasts as they observe the effect of

41、 pension plan changes on subsequent quarterly earnings. But Amir and Gordon 1996 contend equity values are consistent with stock markets consideration of reported post-retirement benefit liabilities at face value without adjusting for differences in assumptions.The present study examines the valuati

42、on implication of pension transition adjustments and OCI components in the initial adoption year of SFAS 158 in presence of earnings measures for a sample of S&P large, mid-cap and small-cap firms. By performing several cross-sectional regression analyses, we find a negative association between both

43、 the level and change in stock returns and the magnitude of pension transition adjustments. We also observe reported earnings proxy and some OCI components such as foreign currency translation adjustment and pension liability adjustment are significant in the analyses. When analyzed separately, we find the main results are mostly confined to the sample large S&P 500 firms. We do not observe any significant relationship between stock returns and pension transition adjustments for the S&P mid-cap and small-cap firms. The results suggest