Adoption of IAS 19 by Europe’s premier listed companies: corridor approach versus full recognition

ACCA research report 100


Jan D. Fasshauer 
Justus-Liebig-Universität Giessen

Professor Martin Glaum
Justus-Liebig-Universität Giessen

Professor Donna L. Street 
University of Dayton


While for several years a significant number of European companies have prepared consolidated financial statements using International Financial Reporting Standards (IFRS), 2005 represented the first year of IFRS adoption by thousands of additional European listed companies. For many of the latter, adoption of IFRS significantly changed the way they account for pension plans, especially defined-benefit plans.

The study provides an in-depth analysis and evaluation of the defined-benefit pension plan disclosures provided in 2005 by companies constituting the premier segments of 20 European stock exchanges. Most importantly, the study identifies the method companies select under International Accounting Standard (IAS) 19 for the recognition of actuarial gains and losses, provides insight into factors affecting the policy choice between the three methods allowed under IAS 19 for the recognition of actuarial gains and losses, and assesses the impact on profit and loss (P&L) and the balance sheet of using the new IAS 19 full recognition option, in contrast to the traditional corridor approach.