Marcus Salewski, Henning Zülch

• This paper aims to make a first contribution to the determination of that proportion of the defined benefit obligation (DBO) to be disclosed in the notes which can be attributed to managerial discretion in IFRS statements by capital market oriented German companies in the period of 2000-2008. For this, actuarial assumptions – discount interest rates, the compensation growth rate and projected future pension increases – are replaced by their respective industry medians. In a second step we then assess whether the thus determined discretion component raises the value relevance of the reported DBO. As a result, we can state that managerial discretion does at least not downgrade the value relevance of the DBO. In our view, this can be explained by the fact that the management possesses private information, which may become decision useful information when communicated to the capital market. For the standard setter these results imply that the regulations do not need a further standardization with regard to the actuarial assumptions.