IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

Is the One-Time Accounting Charge Really Trivial? Evidence from the Insurance Industry

Listed author(s):
  • Mulong Wang
  • Chuanhou Yang
  • Hong Zou
Registered author(s):

Motivated by the increasing use of one-time charges in the US insurance industry, this paper examines the information content of explicit announcements of such charges in the US insurance industry over the period 1990 to 2001. We find that, as expected, market reaction tends to vary according to the nature of one-time charges. Specifically, we observe a positive market response to one-time charges due to business restructure and lawsuit settlement, but a negative reaction to charges arising from accounting policy change, increasing loss reserve, and acquisition of other firms. These results are largely consistent with evidence obtained from the general corporate sectors. Additional regression analysis confirms a significant correlation between the magnitude of abnormal returns and the (relative) amount of one-time charges. At a time when more companies are being charged for misleading financial statements, our results provide important insights to industry regulators, managers, and investors.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Article provided by Western Risk and Insurance Association in its journal Journal of Insurance Issues.

Volume (Year): 27 (2004)
Issue (Month): 2 ()
Pages: 160-180

in new window

Handle: RePEc:wri:journl:v:27:y:2004:i:2:p:160-180
Contact details of provider:

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:wri:journl:v:27:y:2004:i:2:p:160-180. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (James Barrese)

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.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 profile, as there may be some citations waiting for confirmation.

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

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.