Public pension accounting rules and economic outcomes

James Naughton, Reining Petacchi*, Joseph Weber

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

13 Scopus citations


We find a negative association between a state's fiscal condition and the use of discretion in applying Governmental Accounting Standards Board (GASB) rules to understate pension funding gaps. We also find that the use of discretion is negatively associated with states' decisions to increase taxes and cut spending. In addition, we find that the funding gap understatement is positively associated with higher future labor costs. Importantly, this association is primarily attributable to the GASB methodology, which systematically understates the funding gap. This suggests that the GASB approach is associated with policy choices that have the potential to exacerbate fiscal stress.

Original languageEnglish (US)
Pages (from-to)221-241
Number of pages21
JournalJournal of Accounting and Economics
Issue number2-3
StatePublished - Apr 1 2015


  • Economic consequences of accounting rules
  • Public pension
  • Real decisions

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


Dive into the research topics of 'Public pension accounting rules and economic outcomes'. Together they form a unique fingerprint.

Cite this