Did pension plan accounting contribute to a stock market bubble?

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Julia Lynn Coronado; Steven A. Sharpe;
  • Journal: Brookings Papers on Economic Activity, volume 34, issue 1, pages 323-371
  • Subject: Stock market ; Pensions | macroeconomics, Pension Plan Accounting, Stock Market Bubble

During the 1990s, the asset portfolios of defined-benefit (DB) pension plans ballooned with the booming stock market. Due to current accounting guidelines, the robust growth in pension assets resulted in a stealthy but substantial boost to the profits of sponsoring corp... View more
  • References (5)

    Sharpe, Steven A. 2002. AHow Does the Market Interpret Analysts= Long-term Growth Forecasts?@ Finance and Economics Discussion Series 2002-07. Washington, DC: Federal Reserve Board.

    Tepper, Irwin. 1981. ATaxation and Corporate Pension Policy.@ Journal of Finance 36(1): 1-13.

    Zion, David and Bill Carcache. 2002. AThe Magic of Pension Accounting.@ Credit Suisse First Boston (September).

    Firms in S&P 500 with DB pension plans, on average 375 firms per year.

    Includes back data on firms added to composite from 1997-1999. Data from Compustat and firm 10-K reports. Estimates for 2002 drawn from Zion and Carcache (2002) and Harris, et. al. (2002).

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