Appraising Commitments and Guarantees with Option Prices

14 Pages Posted: 9 Nov 2007

See all articles by Søren Loentoft Hansen

Søren Loentoft Hansen

Willamette University - Atkinson Graduate School of Management

Michael U. Dothan

Willamette University - Atkinson Graduate School of Management

Fred Thompson

Willamette University - Atkinson Graduate School of Management

Abstract

Budgetary decision-making is prone to myopia and to tunnel vision. Pension commitments suffer from both of these pathologies. In this case, we look closely at the State of Oregon's Public Employee Retirement System to show how the disclosure standards adopted by the Government Accounting Standards Board (GASB) help correct the fiscal vision of state and local governments and further conclude that postemployment commitments ought to be comprehensively examined in GASB's review of its accounting and reporting standards scheduled for 2008, ideally from the standpoint of present-value budgeting.

Suggested Citation

Hansen, Søren Loentoft and Dothan, Michael U. and Thompson, Fred, Appraising Commitments and Guarantees with Option Prices. Public Budgeting & Finance, Vol. 27, No. 4, pp. 99-112, Winter 2007. Available at SSRN: https://ssrn.com/abstract=1028415 or http://dx.doi.org/10.1111/j.1540-5850.2007.00891.x

Søren Loentoft Hansen (Contact Author)

Willamette University - Atkinson Graduate School of Management ( email )

900 State Street
Salem, OR 97301
United States

Michael U. Dothan

Willamette University - Atkinson Graduate School of Management ( email )

900 State Street
Salem, OR 97301
United States
(503) 370-6440 (Phone)

Fred Thompson

Willamette University - Atkinson Graduate School of Management ( email )

900 State Street
Salem, OR 97301
United States
503-370-6228 (Phone)
503-370-3011 (Fax)

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