Date of Award


Document Type


Degree Name

Doctor of Philosophy (PhD)



First Advisor

Vincent C. Brenner


On February 14, 1989, the Financial Accounting Standards Board issued an exposure draft entitled "Employers' Accounting for Postretirement Benefits Other Than Pensions." The provisions of this proposed Statement of Financial Accounting Standards would require that the costs of nonpension postretirement benefits be recognized in employer financial statements over the service lives of employees expected to receive benefits. This study examined the decisions of commercial bank loan officers in an experiment designed to determine whether the proposed accrual of postretirement health care benefits affects the decisions of financial statement users. The following issues were also addressed: (1) Does the nonpension postretirement benefit obligation affect users' decisions in the same manner as an equivalent amount of term loan debt?, (2) Does the existence of a nonpension postretirement benefit plan affect the decisions of users?, and (3) Does the method of accounting for nonpension postretirement benefits affect users' perceptions of this obligation as a liability. A mail questionnaire approach was used to contact a random sample of commercial bank loan officers. The subjects were asked to analyze the financial statements of a hypothetical loan applicant and provide two lending decisions: (1) an assessment of the applicant's ability to repay a $3,500,000 term loan and (2)~a statement of the maximum loan amount they would lend the hypothetical borrower. Subjects were also asked to react to two statements concerning the nature of an employer's obligation to provide nonpension retiree benefits. The findings of this research do not support the FASB's view that accrual accounting treatment of nonpension postretirement benefit costs will improve financial statement users' decisions. The findings also do not provide evidence that users view a nonpension postretirement benefit obligation as being any different from other more conventional forms of debt. Similarly, the results do not indicate that the existence of a nonpension postretirement benefit plan has an effect on users' decisions or that the method of accounting for such a plan influences users' perceptions concerning the employer's commitment to provide benefits. However, experimental evidence suggests that failure to find support for these hypotheses might be attributable to a weak manipulation of the independent variable.