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Regulatory Enforcement and Off-Balance Sheet Entities : = Evidence from the "Shadow Insurance" Market.

Record Type:	Language materials, manuscript : Monograph/item
Title/Author:	Regulatory Enforcement and Off-Balance Sheet Entities :/
Reminder of title:	Evidence from the "Shadow Insurance" Market.
Author:	Voytsekhivska, Inna.
Description:	1 online resource (123 pages)
Notes:	Source: Dissertation Abstracts International, Volume: 79-01(E), Section: A.
Contained By:	Dissertation Abstracts International79-01A(E).
Subject:	Accounting. -
Online resource:	click for full text (PQDT)
ISBN:	9780355213331

Regulatory Enforcement and Off-Balance Sheet Entities : = Evidence from the "Shadow Insurance" Market.
Voytsekhivska, Inna.

Regulatory Enforcement and Off-Balance Sheet Entities :Evidence from the "Shadow Insurance" Market. - 1 online resource (123 pages)

Source: Dissertation Abstracts International, Volume: 79-01(E), Section: A.

Thesis (Ph.D.)

Includes bibliographical references

Captive reinsurance ("shadow insurance") is a controversial form of non-traditional reinsurance that is associated with opaque statutory reporting in the insurance industry. Captive reinsurance subsidiaries are special purposes entities that are not consolidated under statutory accounting principles (SAP) and can be used to manage a firm's statutory reserve liabilities and premiums, which are reported net of reinsurance. This paper studies the relation between regulatory enforcement and an insurance firm's use of off-balance sheet captive insurance entities, as well as the implications of regulatory enforcement and captive reinsurance use for the firm's credit ratings and the degree of information asymmetry in the market for the firm's equity. I find that regulatory enforcement is negatively associated with the use of captive reinsurance among life insurers. Among life insurers, I find some evidence that credit rating agencies infer information about a firm's default risk from its regulatory enforcement environment, and that regulatory enforcement can reduce information asymmetry in the market. Contrary to what I hypothesize, the use of "shadow insurance" is negatively associated with proxies for information asymmetry in equity markets among pure property-casualty insurers. Overall, my findings suggest that regulated firms, credit rating agencies, and equity investors act as if regulatory enforcement increases the credibility of accounting reports and reduces information asymmetry in the market. Also, public awareness of accounting issues may be important for regulatory enforcement and its credibility. These findings should be of interest to regulators, investors, preparers, and other stakeholders impacted by accounting standards and their enforcement.

Electronic reproduction.
Ann Arbor, Mich. :
ProQuest,
2018

Mode of access: World Wide Web

ISBN: 9780355213331Subjects--Topical Terms:

561166
Accounting.
Index Terms--Genre/Form:

554714
Electronic books.

Regulatory Enforcement and Off-Balance Sheet Entities : = Evidence from the "Shadow Insurance" Market.
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504 $a Includes bibliographical references
520 $a Captive reinsurance ("shadow insurance") is a controversial form of non-traditional reinsurance that is associated with opaque statutory reporting in the insurance industry. Captive reinsurance subsidiaries are special purposes entities that are not consolidated under statutory accounting principles (SAP) and can be used to manage a firm's statutory reserve liabilities and premiums, which are reported net of reinsurance. This paper studies the relation between regulatory enforcement and an insurance firm's use of off-balance sheet captive insurance entities, as well as the implications of regulatory enforcement and captive reinsurance use for the firm's credit ratings and the degree of information asymmetry in the market for the firm's equity. I find that regulatory enforcement is negatively associated with the use of captive reinsurance among life insurers. Among life insurers, I find some evidence that credit rating agencies infer information about a firm's default risk from its regulatory enforcement environment, and that regulatory enforcement can reduce information asymmetry in the market. Contrary to what I hypothesize, the use of "shadow insurance" is negatively associated with proxies for information asymmetry in equity markets among pure property-casualty insurers. Overall, my findings suggest that regulated firms, credit rating agencies, and equity investors act as if regulatory enforcement increases the credibility of accounting reports and reduces information asymmetry in the market. Also, public awareness of accounting issues may be important for regulatory enforcement and its credibility. These findings should be of interest to regulators, investors, preparers, and other stakeholders impacted by accounting standards and their enforcement.
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