We examine how a change in statutory accounting rules that reduces U.S. life insurers’ regulatory capital leads them to manage their capital, as well as real effects of this management in the insurance product market. Effective at the end of 2009, Actuarial Guideline 43 (AG 43) increases...

When investors have limited attention, does the way in which net income is measured matter for firm value and firms' resource allocation decisions? This paper uses the Accounting Standards Update (ASU) 2016-01, which requires public firms to incorporate changes in unrealized gains and losses...

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...

This paper examines banks' disclosures and loss recognition in the financial crisis and identifies several core issues for the link between accounting and financial stability. Our analysis suggests that, going into the financial crisis, banks' disclosures about relevant risk exposures were...

This paper investigates what we can learn from the financial crisis about the link between accounting and financial stability. The picture that emerges ten years after the crisis is substantially different from the picture that dominated the accounting debate during and shortly after the crisis....

Lately, as it is known, considerable theoretical and practical attention has been dedicated to the problems of analysing the business efficiency of insurance companies, both worldwide and in particular countries. In view of this, the paper conveys a complex analysis of the 2016 business...

When liquidity plays an important role as in times of financial crisis, asset prices in some markets may reflect the amount of liquidity available in the market rather than the future earning power of the asset. Mark-to-market accounting is not a desirable way to assess the solvency of a...

Risk diversification is one of the many reasons for cross-sector mergers of financialinstitutes. This paper presents a fair-value type asset and liability model in order to identify diversification effects for financial conglomerates (PCs) under various shocks. My analysis for the Netherlands...

Life insurers use accounting and actuarial techniques to smooth reporting of firm assets and liabilities, seeking to transfer surpluses in good years to cover benefit payouts in bad years. Nevertheless, these techniques been criticized as they make it difficult to assess insurers' true financial...