Accounting Policy Choice by Financial Intermediaries: The Use of Accounting Standards by Australian Pension Plans

Abstract

Accounting policy choices by financial intermediaries is a credible signal of their reputation to customers within a financial institution and is endogenous with their marginal fee structure. Various demand-side determinants of accounting policy choice (fpension fund agency costs) and supply-side determinants of financial intermediary fees (financial intermediary characteristics) are posited to influence financial intermediaries preparing accounting reports for Australian pension plans. These relationships are tested for the voluntary use of alternative pension accounting standards (PAS) by samples of 54 Australian defined benefit funded and 54 defined contribution funded pension plans during 1991-92. The evidence is consistent with these posited relationships.

JEL Classification: D82, G22, J41, M41