The impact of financial holding company on the earnings management of subsidiary life insurance company

• Main Authors: Chang, Wei-Jung, 張維容
• Other Authors: 陳彩稚
• Format: Others
• Language: zh-TW
• Published: 2018
• Online Access: http://ndltd.ncl.edu.tw/handle/579yjk

碩士 === 國立政治大學 === 風險管理與保險學系 === 106 === This purpose of this thesis is to study the impact of financial holding company (FHC) on the earnings management of its subsidiary life insurance company. First, this study investigates whether the earnings management of the FHC life insurers is different from that of the non-FHC ones. Secondly, these life insurance companies are categorized into two groups to explore the differences in their earnings management behavior. Finally, the influential factors for the earnings management of the FHC life insurers are analyzed, including the appointment of the board directors for the subsidiary life insurance company and the FHC’s operational performance and risks. Based on the quarterly data of Life Insurance Companies in Taiwn during 2005Q1 -2017Q3, the empirical results are summarized as follows. 1. The FHC life insurance company tends to use the accounting policy discretion to engage in earnings management. However, the non-FHC life insurance company will have higher possibility of earnings management in order to achieve market expectations. 2. The differences in the influential factors for the earnings management behavior between the FHC life insurers and the non-FHC peers mainly result from their board independence, board size, diversification in insurance business and asset size. 3. If the subsidiary life insurance company has a larger board and more board members from the parent FHC or the affiliated firms under the same FHC, the degree of earnings management through accounting policy discretion is lower. 4. The performance of the FHC, especially the operational risk and the degree of diversification in business, can influence the subsidiary life insurer’s business decisions and earnings targets.