Earnings management using estimates and the timing of adoption of accounting standards: An empirical examination of pensions

This study investigates the relationship between adoption timing of Statement of Financial Accounting Standards 87 and earnings management after adoption. Earnings management, defined consistent with Schipper (1989), is tested through hypotheses using (1) a portfolio approach and (2) pension rates. One Hypothesis uses a Modified Jones (1991) Model as a proxy for discretionary accruals and the other uses pension rate estimates.^ Statistically significant relationships are found between adoption timing and (1) discretionary accruals and (2) estimated rate-of-return (ROR) on pension plan assets. Early adopting firms tend to have lower discretionary accruals after adoption than on-time adopters. They also tend to use higher ROR estimates which are not supported by higher actual returns. Thus, while early adopters may be using ROR to manage income, this tends to not result in higher discretionary accruals. ^

Selected psychosocial and demographic factors affecting levels of pre-retirement planning

In September 2002, the State of Florida implemented a new retirement structure for those employed in the Florida Public School System. Teachers were given the option to maintain their existing defined benefit plan or choose the newly offered defined contribution plan. The variables that affect planning for retirement are innumerable. Identifying the most significant variables is essential to understanding how one plans for retirement. ^ This study examined the relationship between hypothesized psychosocial and demographic factors and an individual's level of pre-retirement planning. The criterion variable, the level of pre-retirement planning, comprised two concepts. First, the time spent thinking about retirement was determined by the score an individual received on a pre-retirement planning scale. This scale included the concepts of information gathering, goals, anticipated resources, and long-range planning. Second, implementation of retirement plan procedures was determined by the percentage an individual annually deferred to retirement. ^ The survey used for data collection contained 50 close-ended items. It was distributed to all full-time teachers in nine randomly selected elementary, middle, and senior high schools throughout Miami-Dade County Public Schools. Multiple regression and crosstabulation indicated that math anxiety, general risk, years of service, and total family income were significant predictors of the level of pre-retirement planning, as measured by the pre-retirement planning scale. In addition, the statistical analysis indicated that math anxiety, internal locus of control, years of service, and total family income were significant predictors of the level pre-retirement planning, as measured by the amount deferred to retirement. An individual's level of math anxiety and family income were the two factors that were the most significant predictors for both concepts on the level of pre-retirement planning. ^ Based on the findings of the study, recommendations focused on assessing an individual's level of math anxiety and educating teachers, particularly pre-service candidates, about the factors that affect pre-retirement planning. Further research should investigate the benefit of such educational programs. ^

Defense Expenditure: Central America and The Dominican Republic

It is often speculated that the high allocation of funds to retirement pension systems has influenced the capacity of Central American and Dominican Republic military to modernize. Yet, the comparative study of the allocation of pension and social funds in these particular countries suggest that there is not direct linkage between the poor funding of military modernization plans and the allocation of funds to military pension systems. The research conducted on this subject shows the following results: 1. The Dominican Republic is the only country that has embarked on a considerable procurement of modern equipment and still reports the largest proportion of social expenditures. 2. El Salvador’s defense budget allocates minimal funding to Social Welfare Institute, which as alternative sources of funding. In 2009, El Salvador increased 15 percent funding to the military to respond to increased role in domestic security issues. 3. The Guatemalan defense expenditure on social programs is fairly low, but it has grown during the past six years due to processes of demobilization. However, the Military Social Welfare Institute is administered by a decentralized institution funded directly by the Ministry of Finance. If it were to be considered as a part of the defense budget, its social expenses would account for almost 16% of it. 4. The Honduran Defense Budget has faced a considerable enlargement during the past four years, with social spending expenses taken precedence over modernization efforts. 2 5. The Nicaraguan system of military pensions is administered by a decentralized entity (IPSM) through a system of salary deductions. Information on the funding of this entity is inconclusive. The Nicaraguan Defense spending on social services has reported a drastic 90% drop since the year 2007.