Pensions accounting and value relevance

A Work Project, presented as part of the requirements for the Award of a Masters Degree in Finance from the NOVA – School of Business and Economics

The importance of this research is related with the value of the value relevance literature and its contribution to accounting setters. It is indeed emphasized by the changes in IAS 19 proposed by the IASB in 2010. In this context, the primary objective of this study is to provide a literature review regarding post-retirement benefits with focus in defined benefit plans, taking into consideration the way to account for that and its relation with equity value and also the value relevance from an investor perspective within benefit plans accounting. As conclusion, we identified in previous literature that the full recognition of actuarial gains and losses in equity is more value relevant to the investor, wich is according the last amendment of IAS 19, and its main proposition is the elimination of the corridor approach.