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The value relevance of ‘realistic reporting’: evidence from UK life insurers

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  • Joanne Horton

Abstract

Even under the International Financial Reporting Standard 4 (IFRS 4), the current accounting regime for UK life insurance companies is oriented towards delaying the recognition and distribution of profit, and still remains largely rooted in traditional requirements for statutory solvency reporting. This paper tests empirically the value relevance of the alternative ‘realistic reporting regime’ of voluntary embedded value (EV) disclosures that has been generally adopted by leading UK and Continental European insurers. In recent years, EVs have also been used internally (but not disclosed) by many US life insurers. The results found here are consistent with value relevance and some implications for standard-setters are explored.

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  • Joanne Horton, 2007. "The value relevance of ‘realistic reporting’: evidence from UK life insurers," Accounting and Business Research, Taylor & Francis Journals, vol. 37(3), pages 175-197.
    • Handle: RePEc:taf:acctbr:v:37:y:2007:i:3:p:175-197
    DOI: 10.1080/00014788.2007.9730071
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    Cited by:

    1. Cairns, David & Massoudi, Dianne & Taplin, Ross & Tarca, Ann, 2011. "IFRS fair value measurement and accounting policy choice in the United Kingdom and Australia," The British Accounting Review, Elsevier, vol. 43(1), pages 1-21.
    2. Tsukahara, Makoto & Nishiyama, Kazuhiro & Nakamura, Ryosuke, 2019. "Characteristics of Japanese Life Insurance Companies Disclosing Embedded Value," Working Paper Series 229, Management Innovation Research Center, School of Business Administration, Hitotsubashi University Business School.

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