2006 Volume 15 Issue 1 Pages 57-70
The purpose of this paper is to empirically examine and to analyze the accounting policy selection behavior among Japanese firms in respect of discount rates applied for pension accounting. To be more specific, this paper examines the aspect of pension accounting standards in selecting discount rates. In addition, this paper presents the case studies of Japanese firms, and shows that to what extent discretion is exercised in the process of selecting the discount rates. By reviewing time-series data about the selection of the discount rates, this paper builds the hypotheses (herding behavior and standardization behavior) based on my experiences from practicing. As a result, this paper empirically finds that the managerial discretion in selecting discount rates diminishes over time and the discount rates are being standardized over time.
