Institutional investors are focusing especially on the discount rate and expected rate-of-return assumptions companies use to value pension liabilities and assets.
"Increasingly they are not just trying to understand the disclosure but are re-engineering the numbers, particularly for asset returns and discount rates," Mr. Burke said.
"Some of them change assumed rates of earnings on assets," Mr. Burke said. "Some back out pension income andleave in pension expense to make a more conservative estimate."
Mercer surveyed buy-side analysts on their use of pension financial information in valuing portfolio companies. Mercer consultants met with directors of research and portfolio managers at the firms, whose identities remained confidential in exchange for their cooperation, Mr. Burke said.
"Our goal was to get the pulse of the people who are investing and draw a conclusion on how they regard the level of disclosure by companies" on pension data. "How are the people who value companies looking at pension disclosure?" he said.
In general, they conclude "there is no evidence of misleading information by companies, but the numbers are opaque. The numbers are correct according to" the Financial Accounting Standards Board, "but often the rules don't let them know what's going to happen," Mr. Burke said.
For corporations with defined benefit plans, the new scrutiny by money managers has an important implication, Mr. Burke said.
"There is a new audience of this information and they (the analysts) are reading the fine print and even revising the fine print" to value pension plans and stocks, Mr. Burke said.
A company's desire to keep its stock price high can influence the approach it uses in disclosing pension information in its financial presentation, Mr. Burke said. "Companies can defend their current price better by improving disclosure."
To corporate treasurers, he said, the survey says that "being able to articulate pension information can be helpful in building credibility of management and confidence of investors."
Of the Standard & Poor's 500 companies, only about 300 have defined benefit plans and are subject to such analysis. But only some 100 of them "face a serious challenge of meeting funding requirements," Mr. Burke said. The other 200 are well enough funded that the pension financial statement "is not a big issue."
Mr. Burke couldn't put a proportion on how important pension-related data is in relation to other financial data in valuing companies, saying it depends on the corporation.