재무연구 제 권 호 (2018년 5월)
Asian Review of Financial Research, Vol., No..
pp.1392~1433
pp.1392~1433
Internal Capital Markets and Loss Reserve Error Volatility
In Jung Song Assistant Professor College of Business Hankuk University of Foreign Studies
A rich literature on property-liability insurer loss reserve has developed since the 1970s. Prior research provides evidence that insurers strategically manage earnings via loss reserves but has not incorporated the role of internal capital markets. This paper first examines firm characteristics and internal capital markets activity that are associated with firm and group loss reserve error volatility. Results indicate that insurers who are part of a group and have greater access to internal capital markets tend to have less volatility in their reserve errors than unaffiliated insurers which suggests that internal capital markets provide alternative means of managing insurer capital.
In Jung Song
A rich literature on property-liability insurer loss reserve has developed since the 1970s. Prior research provides evidence that insurers strategically manage earnings via loss reserves but has not incorporated the role of internal capital markets. This paper first examines firm characteristics and internal capital markets activity that are associated with firm and group loss reserve error volatility. Results indicate that insurers who are part of a group and have greater access to internal capital markets tend to have less volatility in their reserve errors than unaffiliated insurers which suggests that internal capital markets provide alternative means of managing insurer capital.
Accounting Discretion,Earning Management,Internal Capital Market,Insurance,Loss Reserve Error
