RATINGS: IT'S ACCRUAL WORLD
| Autor: | David L. Eckles, Evan M. Eastman, James M. Carson |
|---|---|
| Rok vydání: | 2016 |
| Předmět: |
Economics and Econometrics
050208 finance Actuarial science Earnings Accrual media_common.quotation_subject digestive oral and skin physiology 05 social sciences food and beverages Financial strength humanities health services administration Accounting 0502 economics and business Accounting information system Quality (business) Business 050207 economics health care economics and organizations Finance media_common |
| Zdroj: | Journal of Risk and Insurance. 85:787-809 |
| ISSN: | 0022-4367 |
| DOI: | 10.1111/jori.12179 |
| Popis: | Loss reserves are a discretionary tool for managing insurer earnings, with more accurate and/or less volatile reserve errors resulting in higher accruals quality. We investigate whether accruals quality is related to insurer financial strength ratings. Specifically, we use insurer loss reserve errors as a measure of the quality of accruals and examine whether overall accruals quality, as well as a decomposition into innate and discretionary accruals quality, is related to insurer financial strength ratings. We find that firms with lower-quality (noisier) accruals receive lower financial strength ratings from A.M. Best. This result holds for both innate and discretionary accruals. Overall, we provide the first evidence that the quality of accounting information is a significant factor in ratings of insurance firms. |
| Databáze: | OpenAIRE |
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