Reported income and the expected rate of return on pension assets

Eli Amir, Shlomo Benartzi

Research output: Contribution to journalArticlepeer-review


A study demonstrates how companies increase reported income by selecting the expected long-term rate of return on pension assets, an estimation parameter used to measure the annual pension expense. When firms used an expected rate of return (ERR) that is different from the one implied by their pension asset allocation, the pension expense that they report is, on average, understated. This examination of the issue demonstrates that companies do in fact increase reported income this way. Both auditors and regulators should examine these links closely if they are to draw the correct conclusions about the appropriateness of pension disclosures.
Original languageEnglish
Pages (from-to)17-25
Number of pages9
JournalJournal of Financial Statement Analysis
Issue number2
StatePublished - 1997


  • Business And Economics--Investments
  • Studies
  • Statistical analysis
  • Pension funds
  • Financial statement analysis
  • Disclosure
  • Asset allocation
  • Net income
  • Rates of return
  • United States--US
  • 9190:US
  • 4120:Accounting policies & procedures
  • 3400:Investment analysis
  • 9130:Experimental/theoretical treatment
  • 3600:Pension fund management


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