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In this paper, we aim to answer two questions. First, whether firms manipulate reported earnings via pension assumptions when facing mandatory contributions. Second, whether firms alter their earnings management behavior when the Financial Accounting Standard Board (FASB) mandates disclosure of pension asset composition and a description of investment strategy under SFAS 132R.

Our basic approach is to run linear regressions of firm-year assumed returns on the log of pension sensitivity measures, controlling for current and lagged actual returns from pension assets, fiscal year dummies and industry dummies. The larger the pension sensitivity ratios, the stronger the effects from inflated ERRs on reported earnings. We confirm the early results that the regression slopes are positive and highly significant. We construct an indicator variable DMC to capture the mandatory contributions firms face and another indicator variable D132R to capture the effect of SFAS 132R. DMC takes the value of one for fiscal years during which an acquisition takes place and zero otherwise. D132R takes the value of one for fiscal years after December 15, 2003 and zero otherwise.

Our sample covers the period from June 1992 to December 2017. Our key results are as follows. The estimated coefficient (t-statistic) on DMC is 0.308 (6.87). Firms facing mandatory contributions tend to set ERRs at an average 0.308% higher. The estimated coefficient (t-statistic) on D132R is −2.190 (−13.70). The new disclosure requirement under SFAS 132R constrains all firms to set ERRs at an average 2.190% lower. The estimate (t-statistic) on the interactive term DMA×D132R is −0.237 (−3.29). When mandatory contributions happen during the post-SFAS 132R period, firms tend to set ERRs at 0.237% lower than they would do otherwise in the pre-SFAS 132R period.

When firms face mandatory contributions, typically firm experience negative stock market returns. We examine whether managers manage earnings to mitigate such negative impact. We find that firms inflate assumed returns on pension assets to boost their reported earnings when facing mandatory contributions. We also find that managers alter earnings management behavior, in the case of mandatory contributions, following the introduction of new pension disclosure standards under SFAS 132R that become effective on December 15, 2003. Under the new SFAS 132R requirement, firms need to disclose asset allocation and describe investment strategies. This imposes restrictions on managers' discretion in making ERR assumptions, since now the composition of pension assets is a key determinant of the assumed expected rate of return on pension assets. Firms need to justify their ERRs with their asset allocations.

The purpose of this paper is to examine whether the expected rate of return (ERR) management is related to disclosure of pension asset allocation. FAS 132R(1), which requires firms to disaggregate the detailed categories of pension asset allocation, provides a natural experiment setting for investigating the effect of enhanced transparency on firm behavior.

The authors focus on the variation of voluntary disclosure and its effect on ERR management under the two different reporting regimes. The authors measure the variation of voluntary disclosure of the pension asset allocations in the pre-period of FAS 132R(1), by using the self-constructed disclosure score.

First, firms create flexibility in their choice of ERR through opaque disclosure of pension asset allocation. Next, firms with poor disclosures are more likely to adjust ERR downward when accounting standards require greater transparency, implying that, for firms with poor disclosures, mandated transparency in pension asset allocation plays a vital role in reducing the ERR management.

The authors directly illustrate the impact of FAS 132R(1) on ERR management. The authors find that the impact of mandated transparency is not uniform across firms. Next, this study highlights the importance of disclosure in restricting managers’ earnings management motivation.

The authors hand collect the asset allocations under pre-FAS 132R(1) period from the 10-K pension footnotes for all S&P 500 firms, which allows the authors to identify the disclosure variation amongst the firms. Based on the variation of disclosure, the authors construct the ordinal measure of disclosure scores on which the testing indicator variables are built.

This chapter deals with the estimation of the effect of exchange rate flexibility on financial account openness. The purpose of our analysis is twofold: On the one hand, we try to quantify the differences in the estimated parameters when exchange rate flexibility is treated as an exogenous regressor. On the other hand, we try to identify how two different degrees of exchange rate flexibility (intermediate vs floating regimes) affect the propensity of opening the financial account. We argue that a simultaneous determination of exchange rate and financial account policies must be acknowledged in order to obtain reliable estimates of their interaction and determinants. Using a panel data set of advanced countries and emerging markets, a trivariate probit model is estimated via a maximum simulated likelihood approach. In line with the monetary policy trilemma, our results show that countries switching from an intermediate regime to a floating arrangement are more likely to remove capital controls. In addition, the estimated coefficients exhibit important differences when exchange rate flexibility is treated as an exogenous regressor relative to the case when it is treated as endogenous.

Research on effort-reward “imbalance” (ERI) has gained popularity in the occupational health literature, and authors typically use effort-reward ratios (ERRs) to study this phenomenon. This article provides a methodological and theoretical critique of this literature and suggestions on how future research can better study joint effects of efforts and reward.

The authors conducted a simulation study, analyzed panel data and surveyed the literature on the theoretical and methodological basis of the “imbalance” concept.

The simulation study indicates that under many conditions the ERR captures main effects of effort and reward and that effects also depend on the scaling of the variables. The panel data showed that when main effects and the interactions of effort and reward are entered simultaneously in a regression predicting mental and physical health, the significant effect of the ERRs disappears. The literature review reveals that psychological theories include more elaborate theoretical ideas on joint effects of effort and reward.

The results suggest that moderated multiple regression analyses are better suited to detect a misfit between effort and reward than ERRs. The authors also suggest to use the term effort-reward fit in future research.

Methodologically and conceptually the authors showed that the ERR is not an appropriate approach because it confuses main effects with interaction effects. Furthermore, the concept of ERI is better substituted by a broader conceptualization of effort-reward fit that can be integrated with the existing literature on person-environment fit. Recommendations for future research are provided.

The purpose of this paper is to address two questions: did adoption of Statements of Financial Accounting Standards No. 132(R) and No. 158 affect neutrality of the financial reporting with regard to the disclosed expected rate of return (ERR) on pension assets assumptions, and did pension asset allocations change in response to the new recognition and disclosure requirements?

The author uses several measures of association between reported expected return and pension assets allocations to assess neutrality of the reported ERR. The series of tests explores changes in correlations between asset allocations and expected rates of return and changes in the implied risk premiums following adoption of Statements No. 132(R) and No. 158. Granger causality analysis is used to explore the second research question: did pension asset allocations change in response to the new recognition and disclosure requirements?

The empirical results are consistent with improved neutrality of financial reporting following adoption of Standard No. 132(R). There were no detectable changes in neutrality following adoption of Standard No. 158. While the data are consistent with portfolio allocations changing to a greater degree than did expected rates of return following Statement No. 132(R) adoption, the effect appears short-lived.

The overall results are consistent with Standard 132(R) having a positive effect on the neutrality of the reported ERR. Also, there is no evidence of persistent and systematic structuring of transactions around preferred financial reporting outcomes.

The choice of accounting methods is critical in measuring the performance and sustainability of a public defined benefit pension (DBP) plan, and such measurement has an impact on the effectiveness of the entire pension system. Prior literature rarely discusses the choice and rationale of the accounting assumptions for public DBP plans. This study fills the gap by investigating whether crucial plan characteristics, including operational performance, financial health, sponsor fiscal stress, and audit quality, are associated with the accounting assumptions of public DBP plans.

The sample includes 1,170 plan-years from the intersection of the Center for Retirement Research and public DBPs' annual financial reports for the years 2001–2013. This study develops regression models to examine the relationship between the characteristics of public DBP practices and DBP accounting choices.

The empirical results show that the public DBPs that have better investment performance, higher funding status, less fiscal stress, and that are audited by Big 4 accounting firms are more likely to adopt conservative accounting choices.

The study documents the impact of crucial pension plan characteristics on public DBP managers' accounting choices, which were not extensively discussed in pension literature. The findings help us understand the rationale for employing different accounting treatments in the context of public pension fund practices. In addition, the study sheds light on policy implications for the future reform of public pension regulations.

Glass is a promising interposer substrate for 2.5 D integration; yet detailed analysis of the interfacial reliability of through-glass vias (TGVs) has been lacking. The purpose of this paper is to investigate the design and material factors responsible for the interfacial delamination in TGVs and identify methods to improve reliability.

The interfacial reliability of TGVs is studied both analytically and numerically. An analytical solution is presented to show the dependence of the energy release rate (ERR) for interfacial delamination on the via design and the thermal mismatch strain. Then, finite element analysis (FEA) is used to investigate the influence of detailed design and material factors, including the pitch distance, via aspect ratio, via geometry and the glass and via materials, on the susceptibility to interfacial delamination.

ERR for interfacial delamination is directly proportional to the via diameter and the thermal mismatch strain. Thinner wafers with smaller aspect ratios show larger ERRs. Changing the via geometry from a fully filled via to an annular via leads to lower ERR. FEA results also show that certain material combinations have lower thermal mismatch strains, thus less prone to delamination.

The results and approach presented in this paper can guide the design and development of more reliable 2.5 D glass interposers.

This paper represents the first attempt to comprehensively evaluate the impact of design and material selection on the interfacial reliability of TGVs.

This study aims to investigate the factors responsible for substrate cracking reliability problem in through-glass vias (TGVs), which are critical components for glass-based 2.5 D integration.

Numerical models were used to examine the driving force for substrate cracking in glass interposers due to stress coupling during heating. An analytical solution was used to demonstrate how the energy release rate (ERR) for the glass substrate cracking is affected by the via design and the mismatch in thermal strain. Then, the numerical models were implemented to investigate the design factors effects, such as the pitch distance, via diameter, via pattern, via design, effect from a stress buffer layer and the interposer materials selection on the susceptibility to substrate cracking.

ERR for substrate cracking was found to be directly proportional to the via diameter and the thermal mismatch strain. When a via pattern is implemented for high-density integration, a coupling in the stress fields was identified. This coupling effect was found to depend on the pitch distance, the position of the vias, and the via arrangement, suggesting a via pattern-dependent reliability behavior for glass interposers. Changing the design of the via to an annular shape or a substrate-cored via was found to be a promising approach to reduce the susceptibility to substrate cracking compared to a fully filled solid via. Also, the use of a stress buffer layer, an encouraging design prospect presented for the first time for TGVs in this study, was found to significantly reduce cracking. Finally, alternative via and substrate materials showed lower tendency for substrate cracking, indicating that the reliability of glass interposers can be further enhanced with the implementation of such new materials.

This study signifies the first attempt to comprehensively evaluate the susceptibility to crack formation in glass interposers during heating. Therefore, this study provides new perspectives on how to achieve a significant potential reliability improvement for TGVs.

In 2009, the International Accounting Standards Board started revising International Accounting Standard (IAS) 19 to improve the requirements for managing the annual expense of a pension plan. The revised standard became effective in 2013. The purpose of this paper is to investigate what effect this revision had on managerial discretion. The paper also examines the implications of the revision on the value relevance of accounting information.

The authors use a sample of 72 firms listed on the FTSE 100 that have defined benefit plans for the period between 2009 and 2015. The authors use a regression discontinuity design to analyse the effect from the revision of IAS 19 on the choice of managers regarding the expected rate of return-on-plan assets. The paper also investigates whether firms with higher pension sensitivity are more likely to manage earnings upward before the revision of IAS 19. Further, the paper studies the value relevance of earnings after the revision of the accounting standard.

Consistent with predictions, the results show that the adoption of the revised IAS 19 limits the use of the expected rate of return on assets to manage the annual expense of defined benefit plans. This finding shows a sharp increase in the value relevance of earnings.

This finding is useful for users and preparers of financial statements and regulatory bodies as it identifies not only the influence of a change in the accounting standard for earnings management but also provides evidence on the consequences of managers’ discretion.

This paper provides direct evidence on the relationship between regulation and financial reporting discretion. It also provides evidence to accounting standard setters that the revision of IAS 19 improves the value relevance of financial information, which gives additional justification to the changes introduced by regulators.