Characteristics of Japanese Life Insurance Companies Disclosing Embedded Value

Makoto Tsukahara, Kazuhiro Nishiyama and Ryosuke Nakamura

No 229, Working Paper Series from Management Innovation Research Center, School of Business Administration, Hitotsubashi University Business School

Abstract: In this paper, we analyze the disclosure of Embedded Value (EV) information by Japanese firms with life insurance operations to examine the characteristics that promote unregulated disclosure. As a result of the analysis, we found that companies with a larger solvency-margin ratio (disclosure is required by a statutory solvency standard in Japan) and smaller profits tend to disclose EV. Thus, based on the information required in statutory accounting, companies that perceive that their operating and financial positions are not properly valued voluntarily report EV. This suggests that companies try to eliminate information asymmetry through the disclosure. Furthermore, this result was observed in Japan, where several life insurance companies are structured as mutual companies. This suggests that life insurance companies disclose EV for stakeholders other than shareholders. Therefore, we found the role of EV is different from that described in previous research focusing on value relevance.

Keywords: embedded value; Japanese firm; unregulated disclosure; life insurance accounting (search for similar items in EconPapers)
Pages: 14 pages
Date: 2019-06
New Economics Papers: this item is included in nep-ias
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Persistent link: https://EconPapers.repec.org/RePEc:hit:hmicwp:229

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