Arbeitspapier
Discounting and the market valuation of defined benefit pensions
We investigate how deftned beneftt pension schemes of FTSE ftrms are valued by the equity market, focusing on how future liabilities are discounted (since UK data allows us to estimate the duration of pension liabilities fairly accurately). We ftnd that equity market valuation is consistent with discounting without allowing for credit risk. This differs from the approach used in published accounts for which IAS 19 (and SFAS No. 158, its US equivalent) allows for discounting with a corporate bond yield. The difference is signiftcant, as credit risk free discounting would decrease the reported value of FTSE 100 ftrms by about 7%.
- Language
-
Englisch
- Bibliographic citation
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Series: Working Paper ; No. 932
- Classification
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Wirtschaft
Accounting
Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- Subject
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Defined benefit pensions
IAS 19
Valuation
UK companies
- Event
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Geistige Schöpfung
- (who)
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Larcher, Luca
Breedon, Francis J.
- Event
-
Veröffentlichung
- (who)
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Queen Mary University of London, School of Economics and Finance
- (where)
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London
- (when)
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2021
- Handle
- Last update
-
10.03.2025, 11:44 AM CET
Data provider
This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Larcher, Luca
- Breedon, Francis J.
- Queen Mary University of London, School of Economics and Finance
Time of origin
- 2021
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Von der Bewertung und Bilanzierung leistungsorientierter Pensionsverpflichtungen nach IAS 19 : = The valuation and accounting of defined benefit obligations in accordance with IAS 19
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Von der Bewertung und Bilanzierung leistungsorientierter Pensionsverpflichtungen nach IAS 19 : = The valuation and accounting of defined benefit obligations in accordance with IAS 19
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