This paper investigates whether and how investors reacted to the pronouncements related to SFAS No. 158. I document a significantly negative market reaction to the initiation of the SFAS No. 158 project. Furthermore, I find that the market reaction is more negative for timely accelerated filers and for firms with large pension plans that had measured their pension information as of a date more than 30 days before fiscal yearends, suggesting that the measurement date provision imposes significant implementation costs on these firms. Consistent with the argument that the recognition provision affects stock prices through changes in contracting costs, I also document a more negative market reaction for firms with higher financial leverage, larger off-balance-sheet pension liabilities, and less investment opportunities. Additional analysis shows that the associations between the market reaction and the firm characteristics are less pronounced for firms with a higher level of dedicated institutional ownership or analyst following, suggesting that firms with a higher level of dedicated institutional ownership or analyst following are less likely to be affected by the recognition provision through changes in contracting costs. Overall, the results suggest that SFAS No. 158 imposes significant implementation costs on firms with defined benefit pension plans.