 Corporate transparency and reserve management: Evidence from US property-liability insurance companiesSangyong Han, Gene C. Lai and Chia-Ling Ho Journal of Banking & Finance, 2018, vol. 96, issue C, 379-392 Abstract: Using a sample of US publicly traded property-liability insurers, we examine the effect of corporate transparency on earnings management. We find that a higher level of corporate transparency is associated with more conservative loss-reserves estimation. Our evidence shows that the positive effect of corporate transparency on insurers’ reserves-estimate conservatism is more pronounced for insurers that are smaller and have more diversified lines of business and that certain board characteristics—such as being smaller, meeting more frequently, and having a higher percentage of independent directors—can restrain the inadequate reserves management of less transparent US publicly traded property-liability insurers. We also provide evidence that additional regulatory mandates to seek greater transparency in the Sarbanes-Oxley Act may be redundant, given the existing regulations in the property-liability insurance industry. Finally, we find insurers’ conservative reserve estimates were more pronounced during the 2008–2009 financial crisis. Keywords: Corporate transparency; Financial crisis; Reserve management; SOX (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:96:y:2018:i:c:p:379-392 DOI: 10.1016/j.jbankfin.2018.07.017 Access Statistics for this article Journal of Banking & Finance is currently edited by Ike Mathur More articles in Journal of Banking & Finance from Elsevier |
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