Business Commons^™

Is A Pension Fund's Mix Of Fair Value Investments, Audit Type, And Audit Quality Associated With The Firm's Credit Rating?, Trevor England

Doctor of Business Administration Dissertations

There has been a proliferation of alternative investment holdings by defined benefit pension plans during the 21^st century. While holdings of alternative investments may advantage pension plans and their sponsoring firms through diversification and/or less volatile returns, they may also present valuation problems because underlying investments in opaquely valued (or marked-to-model) securities contain larger estimation error and uncertainty. Such valuation problems may concern credit reporting agencies because the sponsoring firm’s pension plan liability is uncertain. This problem is exacerbated through agency relationships within pension plans that enable executives and investment managers to engage in opportunistic financial reporting of fair …