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Characteristics of Japanese Life Insurance Companies Disclosing Embedded Value


  • Tsukahara, Makoto
  • Nishiyama, Kazuhiro
  • Nakamura, Ryosuke


In this paper, we analyze the disclosure of Embedded Value (EV) information by Japanese firms with life insurance operations to examine the characteristics that promote unregulated disclosure. As a result of the analysis, we found that companies with a larger solvency-margin ratio (disclosure is required by a statutory solvency standard in Japan) and smaller profits tend to disclose EV. Thus, based on the information required in statutory accounting, companies that perceive that their operating and financial positions are not properly valued voluntarily report EV. This suggests that companies try to eliminate information asymmetry through the disclosure. Furthermore, this result was observed in Japan, where several life insurance companies are structured as mutual companies. This suggests that life insurance companies disclose EV for stakeholders other than shareholders. Therefore, we found the role of EV is different from that described in previous research focusing on value relevance.

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  • 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.
  • Handle: RePEc:hit:hmicwp:229

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    References listed on IDEAS

    1. Begoña Giner Inchausti, 1997. "The influence of company characteristics and accounting regulation on information disclosed by Spanish firms," European Accounting Review, Taylor & Francis Journals, vol. 6(1), pages 45-68, May.
    2. 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.
    3. George Serafeim, 2011. "Consequences and Institutional Determinants of Unregulated Corporate Financial Statements: Evidence from Embedded Value Reporting," Journal of Accounting Research, Wiley Blackwell, vol. 49(2), pages 529-571, May.
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    embedded value; Japanese firm; unregulated disclosure; life insurance accounting;
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