Setting Expected Rates of Return on Pension Plan Assets: New Evidence on the Influence of Audit Committee Accounting Experts

22 Pages Posted: 10 Apr 2012 Last revised: 4 Dec 2017

See all articles by Joseph Comprix

Joseph Comprix

Syracuse University

Jun Guo

Rutgers, The State University of New Jersey - Rutgers University, Camden

Yan Zhang

State University of New York at Binghamton - School of Management

Nan Zhou

University of Cincinnati - Lindner College of Business

Date Written: May 23, 2017

Abstract

This study examines whether having accounting experts on audit committees can mitigate the upward bias of expected rates of return (ERR) on pension plan assets documented in prior research. ERRs are found to be lower in firms with accounting expertise on their audit committees. These results are robust after controlling for variables from extant governance and pension research, and they suggest that audit committee accounting experts can help deter managers from setting higher ERRs on pension assets. While extant studies find that opportunistic setting of pension assumptions can be controlled through regulation, this paper provides new evidence on the influence of audit committee accounting experts on critical pension estimates. This newfound governance effect is different from and incremental to the regulation effect previously documented in the pension accounting literature.

Keywords: Audit Committee, Accounting Experts, Expected Rate of Return (ERR), Pension Accounting

Suggested Citation

Comprix, Joseph and Guo, Jun and Zhang, Yan and Zhou, Nan, Setting Expected Rates of Return on Pension Plan Assets: New Evidence on the Influence of Audit Committee Accounting Experts (May 23, 2017). Research in Accounting Regulation, Vol. 29, No. 2, 2017, Page 159-166. Available at SSRN: https://ssrn.com/abstract=2037941 or http://dx.doi.org/10.2139/ssrn.2037941

Joseph Comprix

Syracuse University ( email )

Whitman School of Management
721 University Avenue
Syracuse, NY 13244-2450
United States
315-443-3674 (Phone)
315-442-1461 (Fax)

Jun Guo (Contact Author)

Rutgers, The State University of New Jersey - Rutgers University, Camden ( email )

Camden, NJ 08102
United States

Yan Zhang

State University of New York at Binghamton - School of Management ( email )

P.O. Box 6015
Binghamton, NY 13902-6015
United States
607-777-6195 (Phone)
607-777-4422 (Fax)

Nan Zhou

University of Cincinnati - Lindner College of Business ( email )

P.O. Box 210211
Cincinnati, OH 45221-0211
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
37
Abstract Views
1,215
PlumX Metrics