We propose a new reserve error measure net of loss development forecasting error using the most basic actuarial technique of estimating loss development. We argue that the proposed measure is better for capturing managerial discretion than the traditional reserve error measures due to its...

In this paper, we investigate earnings management surrounding forced CEO turnover for U.S. property-casualty insurance companies with differing organizational forms. We analyze the three principal organizational form types in the industry – publicly-traded stocks, closely-held stocks, and...

We examine the effect of directors' and officers' liability insurance (D&O insurance) on the behavior of independent directors and the effectiveness of their governance role. Using a unique dataset, we find a negative relation between D&O insurance and personal board meeting attendance by...

Appointed actuaries are responsible for estimating the largest liability on property-casualty insurance companies' balance sheet. Actuarial independence is crucial in safeguarding accurate estimates, where this independence is self-regulated by actuarial professional institutions. However,...

This paper examines the relation between tournament incentives and reserve management. We find a positive relation between internal tournament incentives and reserve errors, implying that a larger pay gap as a tournament prize induces vice presidents (VPs) to overestimate loss reserves. In other...

Using C-Score, which is a firm-year measure of earnings conservatism developed by Khan and Watts (2009), this study examines the effect of directors' and officers' liability (D&O) insurance on earnings conservatism, and explores whether the increased litigation risk caused by firm's...

A numbers of studies focusing on the determinant of the insurance market efficiency haveincreased in the last decade. In fact, many factors, like the CEO's power, can influence the efficiency in the insurance firm. The purpose of this research is to analyze the relationship between efficiency,...

We examine the relation between executive compensation and market-implied default risk for listed insurance firms from 1992-2007. Shareholders are expected to encourage managerial risk-sharing through equity-based incentive compensation. We find that long-term incentives and other share-based...

This paper examines whether managers impact firm performance when their firms are in distress. We conservatively define managerial ability as the manager's capacity to deploy the firm's resources. We verify the validity of our metric using a manager-firm matched panel data set which allows us to...

We examine the effect of directors' and officers' liability insurance (D&O insurance) on the outcomes of merger and acquisition (M&A) decisions. We find that acquirers whose executives have a higher level of D&O insurance coverage experience significantly lower announcement-period abnormal stock...