A paper published by the National Bureau of Economic Research found that corporate executives use pension assumptions to manipulate corporate earnings.
"Managers are more aggressive with assumed long-term rates of return when their assumptions have a greater impact on reported earnings," according to an abstract of the paper by Daniel Bergstresser, Mihir A. Desai and Joshua Rauh. "Managers also increase assumed rates of return as they prepare to acquire other firms and as they exercise stock options, further confirming the opportunistic nature of these increases."
The paper also notes that "earnings manipulation arising from managerial motivations influences significant managerial investment decisions."
