Research Discussion Papers, Bank of Finland
No 15/2015:
Regulations, institutions and income smoothing by managing technical reserves: international evidence from the insurance industry
Chrysovalantis Gaganis ()
, Iftekhar Hasan ()
and Fotios Pasiouras ()
Abstract: This paper investigates the role of technical reserves in
the income smoothing behavior of insurance companies. This is one of the
first attempts in the literature to trace such relationship in the
insurance industry, especially at a multi-country setting. The experience
of 770 insurance firms operating in 87 countries over the period 2000-2009
reveals that there is a significant evidence of income smoothing. The paper
also finds that institutional characteristics, e.g., the rule of law,
common law legal origin, economic freedom, and regulations relating to
technical provisions and supervisory power constrain income smoothing but
other factors such as capital requirements, tax deductibility of
provisions, auditing, and corporate governance do not have a significant
effect.
Keywords: earnings management; income smoothing; insurance; technical reserves; (follow links to similar papers)
JEL-Codes: G20; G22; M40; M48; (follow links to similar papers)
45 pages, August 17, 2015
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Gaganis, Chrysovalantis, Iftekhar Hasan and Fotios Pasiouras, 'Regulations, institutions and income smoothing by managing technical reserves: international evidence from the insurance industry', Omega, The International Journal of Management Science.
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