An Event Study Analysis of Statement of Financial Accounting Standards No. 158

Abraham N. Fried


This study examines the economic consequences of the Statement of Financial Accounting Standards (SFAS) No. 158 requirement to recognize previously disclosed net pension and postretirement benefit obligations on the balance sheet. The study documents a negative stock price reaction around the release of the SFAS No. 158 Exposure Draft. Additionally, the results indicate that the market reaction varies cross-sectionally with the magnitude of the balance sheet adjustment required by SFAS No. 158 and is driven by the other postretirement plan adjustment rather than the pension plan adjustment. The findings have important implications for the recognition versus disclosure debate because they document a significant market reaction to the relocation of already disclosed information from the financial statements footnotes to the balance sheet.

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Accounting and Finance Research
ISSN 1927-5986 (Print)   ISSN 1927-5994 (Online) Email:

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