Incentives for Accounting Policy Choice by Australian Life Insurers: Further Evidence on the Information Asymmetry Perspective

Posted: 24 Feb 1997

Date Written: December 1996

Abstract

Prior research has demonstrated that switching to newly available accounting techniques can reduce the degree of information asymmetry by making financial statements more informative to investors. Life insurers incur contracting costs as a mechanism to resolve their information asymmetry problems. I predict that managers of Australian life insurers with greater information asymmetry are more likely to voluntarily use jointly-developed Australian and New Zealand life insurance accounting standards (LIAS) when it first became available. Results support this prediction, even after controlling for other variables commonly used in prior studies to investigate accounting policy choices by firms.

JEL Classification: M41, M44, D82

Suggested Citation

Klumpes, Paul J.M., Incentives for Accounting Policy Choice by Australian Life Insurers: Further Evidence on the Information Asymmetry Perspective (December 1996). Available at SSRN: https://ssrn.com/abstract=2892

Paul J.M. Klumpes (Contact Author)

Nottingham Trent University ( email )

Burton Street
Nottingham NG1 4BU, NG1 4LN
United Kingdom

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