The Impact of Changes in Pension Accounting under IAS 19R on Shareholder Wealth

ABSTRACT This study examines stock price reactions to International Accounting Standards Board announcements associated with Standard (IAS) 19R during the standard-setting process. IAS removes corridor approach in accounting for actuarial gains and losses on defined benefit plans. rule change likely weakens financial position of most firms that previously used upon adoption subsequently increases balance sheet volatility. Using a sample listed Norway, we find market generally reacts negatively events, but responses are insignificantly different affected unaffected firms, suggesting shareholders view standard as value neutral. However, more negative higher bankruptcy risk. Additional analyses indicate vary discretion assumptions funded status. Overall, our results document how investors respond amendments pension rules under 19R.