Does recognition versus disclosure of pension liabilities affect credit ratings? Evidence from Japan

Whether credit market participants process disclosure and recognition of pension information differently has not been fully explored. To fill this gap, study investigates whether the change in a accounting standard related to rule influences firms’ risk Japan. Statement No. 26, Accounting Standard for Retirement Benefits, stipulates that firms recognize previously disclosed on balance sheet. Employing implementation I explore how differences between recognized liabilities affect ratings. find off–balance sheet are associated with ratings prior 26. also similar relations versus When have small plan deficit, provide risk-relevant information, relevance is statistically similar. My overall results suggest mandating does assessment by rating agencies.