In September 2006, the Financial Accounting Standards Board issued a new standard for pensions, referred to when issued as Statement of Financial Accounting Standards No. 158 "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans" (FASB 2006) and currently referred to as Accounting Standards Codification (ASC) 715 Compensation—Retirement Benefits, 30 Defined Benefit Plans—Pension, 25 Recognition. The objective of the new standard is to increase understandability of financial statements and improve timeliness and representational faithfulness relating to the funded status of defined benefit pension plans. The results presented in this study demonstrate the impact the new standard has on debt-asset ratios and on debt-equity ratios. Accordingly, the new accounting standard causes some firms to experience a material deterioration in their financial position based on the debt-asset and debt-equity ratios. The new standard provides a more conservative and accurate reporting of the funded status of defined benefit pension plans and therefore more useful information to investors and creditors.



To view the content in your browser, please download Adobe Reader or, alternately,
you may Download the file to your hard drive.

NOTE: The latest versions of Adobe Reader do not support viewing PDF files within Firefox on Mac OS and if you are using a modern (Intel) Mac, there is no official plugin for viewing PDF files within the browser window.