IDEAS home Printed from https://ideas.repec.org/a/bla/jrinsu/v86y2019i4p1019-1043.html
   My bibliography  Save this article

Reserve Management and Audit Committee Characteristics: Evidence from U.S. Property–Liability Insurance Companies

Author

Listed:
  • Wen‐Yen Hsu
  • Yenyu (Rebecca) Huang
  • Gene Lai

Abstract

We examine the relation between reserve management and a set of audit committee characteristics of property–liability insurers, using reserve errors as a proxy for reserve management. We find that insurers with three audit committee characteristics have more conservative loss reserve estimations: larger audit committee size and more members with accounting expertise, and more audit committee meetings. Our results also find that three recommendations of the 1999 Blue Ribbon Committee can make corporate audit committees more effective: a minimum audit committee size, a minimum level of accounting expertise, and a minimum number of audit committee meetings. These results were obtained when we controlled for board of director characteristics, firm‐specific characteristics, and Sarbanes–Oxley. Some board composition variables (e.g., director ownership) also have an impact on reserve management during our study period. The evidence overall suggests that the audit committee and some board characteristics have an impact on reserve management (earnings management) even in a regulated environment such as the insurance industry.

Suggested Citation

  • Wen‐Yen Hsu & Yenyu (Rebecca) Huang & Gene Lai, 2019. "Reserve Management and Audit Committee Characteristics: Evidence from U.S. Property–Liability Insurance Companies," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 86(4), pages 1019-1043, December.
    • Handle: RePEc:bla:jrinsu:v:86:y:2019:i:4:p:1019-1043
    DOI: 10.1111/jori.12251
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/jori.12251
    Download Restriction: no
    File URL: https://libkey.io/10.1111/jori.12251?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Roberto Bomgiovani Cazzari & Guilherme Rodovalho Fernandes Moreira, 2022. "Uncertainty of Claims Provisions from the Analysis of Financial Statements," RAC - Revista de Administração Contemporânea (Journal of Contemporary Administration), ANPAD - Associação Nacional de Pós-Graduação e Pesquisa em Administração, vol. 26(3), pages 200400-2004.
    2. Chia-Ling Ho & Gene Lai & Sangyong Han & Licheng Jin, 2022. "Organisational structure, corporate governance and reinsurance decisions in the U.S. property-liability insurance industry," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 47(4), pages 737-784, October.
    3. Mercedes Rodríguez‐Fernández & Ana I. Gaspar‐González & Eva M. Sánchez‐Teba, 2020. "Sustainable social responsibility through stakeholders engagement," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(6), pages 2425-2436, November.
    4. Jill Bisco & Kathleen McCullough & Hugo Moises Montesinos Yufa & Eleanor Tice Sirmans, 2023. "The impact of monitor choice on insurer loss reserves," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 26(1), pages 83-105, March.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jrinsu:v:86:y:2019:i:4:p:1019-1043. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/ariaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.