The Impacts of Board Characteristics on Earnings Management: Evidence from Amortizations of Insurance Acquisition Costs
Date Issued
2012
Date
2012
Author(s)
Liao, Yi-Ting
Abstract
This paper examines the relations between board characteristics, earnings management incentives and deferred acquisition costs (DAC) amortizations of publicly traded insurance firms. The results indicate that earnings smoothing is highly significantly associated with DAC amortizations, and earnings smoothing through DAC amortizations is somewhat mitigated by boards with smaller percentage of outside directors, larger average age of board directors, and smaller percentage of directors who are under 70. While some of the results are contrary to academic common findings (i.e., firms with smaller percentage of outside director members engage less in earnings smoothing), it can be interpreted that in a specialized and regulated industry such as insurance, governance structures of boards and their effectiveness cannot be generalized from nonfinancial firms.
Subjects
Insurance acquisition costs amortizations
Board characteristics
Earnings management
Type
thesis
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