A study by Zion and Carcache of Credit Suisse First Boston estimated that if the companies included in the Standard & Poor's 500 index had replaced the ROA projections for their pension plans with the plans' actual performance, the companies' aggregate reported earnings would have ________.

Question

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The question states that the companies had replaced their projections with the plans' actual performance. If the actual performance was worse than the projections (which is likely), then the companies would have had to report a lower income due to the increased pension expense. Therefore, the aggregate reported earnings would have declined.

A Study by Zion and Carcache of Credit Suisse First