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September 10, 2025Contemporary Accounting Research

Does mandatory recognition of off–balance sheet liabilities affect capital structure choice? Evidence from SFAS 158

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Authors

MAMichael AxenrodESCP Business School MKMichael KisserBI Norwegian Business School

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Implication

Analysis reveals off-balance sheet liabilities influence capital structure in defined benefit plan sponsors, suggesting major adjustments post-recognition.

Key Points

Mandatory recognition of off-balance sheet liabilities results in reduced financial leverage for unrated DB plan sponsors.
Notable financial adjustments include net debt retirements and net equity issuances to align with estimated leverage targets.
DB plan sponsors with tight floating-GAAP covenants also reduce leverage primarily via net debt retirements.
The results highlight the influence of reporting requirements on capital structure decisions across different sponsor ratings.

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Axenrod et al. (2025) studied this question.

synapsesocial.com/papers/68c1c32e54b1d3bfb60f13ec https://doi.org/10.1111/1911-3846.13060

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Implication

Analysis reveals off-balance sheet liabilities influence capital structure in defined benefit plan sponsors, suggesting major adjustments post-recognition.

Does mandatory recognition of off–balance sheet liabilities affect capital structure choice? Evidence from SFAS 158

Discussion

Member takes

Implication

Key Points

Cite This Study

Does mandatory recognition of off–balance sheet liabilities affect capital structure choice? Evidence from SFAS 158

Discussion

Member takes

Implication

Key Points

Cite This Study

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