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IFRS Standards and Insurance Companies: What Stakes for Long-Term Investment? A French Case Explanatory Analysis

Author

Listed:
  • Samira Demaria

    (GREDEG CNRS
    University of Nice Sophia Antipolis)

  • Sandra Rigot

    (CEPN CNRS
    University of Paris North)

Abstract

This paper investigates to what extent IFRS standards may cause incentives or constraints on long-term investment strategies of French insurance companies, based on 43 semi-structured interviews of insurance companies’ managers, regulators and professional organizations in France. Our results show that practitioners highlight some issues related to the capacity of current IFRS accounting rules to give a fair representation of their activities related to their specific profile. First, they underline an artificial mismatch between assets and liabilities measurement related to IAS 39 and IFRS 4 phase 1. Second, they point out effects on their asset allocation strategies due to the increased short-term volatility introduced by fair value measurement. After investigating solutions to recognising the long-term horizon in asset category, we discuss the necessary consistency of accounting standard for representing long-term business.

Suggested Citation

  • Samira Demaria & Sandra Rigot, 2014. "IFRS Standards and Insurance Companies: What Stakes for Long-Term Investment? A French Case Explanatory Analysis," GREDEG Working Papers 2014-04, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.
  • Handle: RePEc:gre:wpaper:2014-04
    as

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    File URL: http://www.gredeg.cnrs.fr/working-papers/GREDEG-WP-2014-04.pdf
    File Function: First version, 2014
    Download Restriction: no

    References listed on IDEAS

    as
    1. Allen, Franklin & Carletti, Elena, 2008. "Mark-to-market accounting and liquidity pricing," Journal of Accounting and Economics, Elsevier, vol. 45(2-3), pages 358-378, August.
    2. Ding, Yuan & Hope, Ole-Kristian & Jeanjean, Thomas & Stolowy, Herve, 2007. "Differences between domestic accounting standards and IAS: Measurement, determinants and implications," Journal of Accounting and Public Policy, Elsevier, vol. 26(1), pages 1-38.
    3. Campbell, John Y. & Viceira, Luis M., 2002. "Strategic Asset Allocation: Portfolio Choice for Long-Term Investors," OUP Catalogue, Oxford University Press, number 9780198296942.
    4. Geoffrey Whittington, 2008. "Fair Value and the IASB/FASB Conceptual Framework Project: An Alternative View," Abacus, Accounting Foundation, University of Sydney, vol. 44(2), pages 139-168.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Insurance industry; long-term investment; IFRS accounting;

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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