In this study, we examine the effect of capital regulation on insurers’ pricing behavior using homeowners’ insurance price data. We leverage a regulatory reform that imposes greater regulatory capital costs for insurers to provide property coverage in catastrophe-prone areas. We first...

Financial statement users struggle to understand complex estimates. We examine whether increased disclosure around complex estimates aids financial statement users’ understanding of the underlying estimate. We use the adoption of ASU 2015-09, which required increased disclosure surrounding a...

The Financial Accounting Standard Board (FASB) recently issued Accounting Standards Update No. 2016-01 which requires firms to report unrealized gains and losses on available-for-sale (AFS) equity securities in net income, thus reducing firms’ ability to manage or smooth earnings. Previously,...

We examine costs and benefits associated with accounting standards that allow property-casualty insurers to discount their loss reserves. While discounting reserves presents a more complete assessment of a firm’s economic condition, it may also be used to manage earnings. Using a sample of...

This study examines the impact of enterprise risk management (ERM) programs on corporate tax planning. ERM is a holistic approach to managing an enterprise’s entire portfolio of risks (COSO 2004, 2017). We expect that enhanced coordination across business units as a result of ERM allows firms...

We examine whether accounting rules can influence gains trading activities in financial institutions.Gains trading occurs when managers strategically sell invested assets to affect earnings.We focus on the U.S. insurance industry, where Life insurers are subject to a rule that requiresthem to...

Insurance regulators substantially relaxed rules on deferred tax asset (DTA) inclusion in regulatory capital calculations during and following the financial crisis. We find evidence that firms use increased discretion in regulation to increase the share of their regulatory capital relating to...