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korean management review - Vol. 50, No. 4

[ Article ]
korean management review - Vol. 50, No. 4, pp.1071-1105
Abbreviation: kmr
ISSN: 1226-1874 (Print)
Print publication date 31 Aug 2021
Received 19 Feb 2021 Revised 11 Apr 2021 Accepted 26 Apr 2021

The Effect of Discretionary Pension Actuarial Assumption on the Value Relevance of Pension Accounting Information
Ji-Ahn Nam ; Jong-Seo Choi
(First Author) Pusan National University, School of Business (
(Corresponding Author) Pusan National University, School of Business (

보험수리적가정의 재량적 결정이 퇴직급여 회계정보의 가치관련성에 미치는 영향

This is an open access article distributed under the terms of the Creative Commons Attribution License 4.0, which permits unrestricted, distribution, and reproduction in any medium, provided the original work is properly cited.


This study examines the effect of discretionary pension actuarial assumption on the value relevance of pension accounting information. Extant literature document that firms’ financial profiles affect pension actuarial choices. However, it is difficult for investors to judge the soundness of the actuarial assumptions due to the complexity in nature. Furthermore, the pension assumptions determined by managerial opportunistic choices are likely to affect the value relevance of pension information. Using a sample of Korean listed non-financial firms which adopt a defined benefit(DB) pension plan from 2011 to 2018, we find that firms are likely to report aggressive actuarial assumptions when leverage is high or risk of loss-reporting exists. We also find that the aggressive actuarial choices due to the financial status negatively affect the value relevance of pension information, especially when the pension sensitivity increases.

Keywords: actuarial assumptions, defined benefit pension plan, value relevance

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∙ The author Ji-Ahn Nam is currently Ph.D candidate in the college of business administration at Pusan National University. She graduated bachelor’s degree of Commerce in Accounting from Macquarie University in Australia, master’s degree of Business Administration from Pusan National University. Her main research interests are on goodwill, pension accounting, accounting quality, value relevance.

∙ The author Jong-Seo Choi received his bachelor’s degree from Pusan National University as summa cum laude, master’s degree from Seoul National University, and doctorate from Pusan National University. He has served the deanship of the School of Business (Graduate School of Management) at Pusan National University. He was invited to Waseda University, Ritsumeikan University, Kyoto University, LaTrobe University, Monash University of Australia, Jiangxi University of Finance and Economics in China, and University of Science Malaysia in Malaysia as visiting professor and invited lecturer. He has served as editor of numerous peer-reviewed domestic and international journals and is currently serving as the editor-in-chief of Korean Accounting Review. His primary research interests are on managerial accounting discretion, economic consequence of accounting choice, fair value measurement and CSR among others.