Abstract: Serafeim [2011] examines the determinants and economic consequences of embedded value (EV) reporting, a voluntary disclosure arrangement in the life insurance industry. He finds substantial reductions in bid-ask spreads for EV reporting firms, and links the occurrence of this disclosure practice to the nature of competition in the insurance business. In my discussion, I focus on two aspects of his hypothesis development: (1) does EV reporting give rise to a credible commitment to transparency? (2) What are the country-level determinants of EV reporting? First, on a conceptual level, I highlight the distinction between an ex ante commitment to transparency and ex post voluntary disclosure. To illustrate my point, I examine the change in information asymmetry around various voluntary disclosure choices with varying degrees of commitment. I find a reduction in bidask spreads following U.S. cross-listings and the voluntary adoption of IFRS, but not after a switch to a Big Five auditor. These results let me gauge the magnitude of the effects for EV reporting. Second, I discuss the notion of complementarities among the elements of a country’s institutional environment. I then empirically show that institutional forces likely act both ways, i.e., from a single industry to the rest of the economy and vice versa, and that EV reporting is not independent from other voluntary commitment devices in a country. In sum, my findings underscore the importance of (and difficulties in) cleanly identifying the determinants and effects of voluntary disclosure choices. JEL classification: G14, G15, G30, K22, M41, M42

Abstract: Serafeim [2011] examines the determinants and economic consequences of embedded value (EV) reporting, a voluntary disclosure arrangement in the life insurance industry. He finds substantial reductions in bid-ask spreads for EV reporting firms, and links the occurrence of this disclosure practice to the nature of competition in the insurance business. In my discussion, I focus on two aspects of his hypothesis development: (1) does EV reporting give rise to a credible commitment to transparency? (2) What are the country-level determinants of EV reporting? First, on a conceptual level, I highlight the distinction between an ex ante commitment to transparency and ex post voluntary disclosure. To illustrate my point, I examine the change in information asymmetry around various voluntary disclosure choices with varying degrees of commitment. I find a reduction in bid-ask spreads following U.S. cross-listings and the voluntary adoption of IFRS, but not after a switch to a Big Five auditor. These results let me gauge the magnitude of the effects for EV reporting. Second, I discuss the notion of complementarities among the elements of a country’s institutional environment. I then empirically show that institutional forces likely act both ways, i.e., from a single industry to the rest of the economy and vice versa, and that EV reporting is not independent from other voluntary commitment devices in a country. In sum, my findings underscore the importance of (and difficulties in) cleanly identifying the determinants and effects of voluntary disclosure choices.

Abstract: Insurance companies are exposed to many different types of risk, in particular actuarial as well as financial risks. As a consequence, the classical actuarial principle of pooling does not provide a sufficient basis for the valuation and risk management of the total portfolio of an insurance company. Instead, the methodology needs to be complemented by modern financial mathematics that enables a market consistent valuation. The current article provides an introduction to the fundamental principles of financial mathematics that were originally developed by Fischer Black, Robert Merton and Myron Scholes in the beginning of the 1970s. We will discuss the relevance of these concepts for insurance firms in the context of internal models and the computation of the market consistent embedded value (MCEV).

Abstract: Based on accumulated empirical evidence, the academic community has generally come to agree that value investment strategies, on average, outperform growth investment strategies (Chan and Lakonishok, 2004:71). An influential article by Fama and French (1992) tested the notion that United States stock prices might be related to the ratio of a firm’s book value of common equity (BV) to its market value of common equity (MV). It found that companies with high book value relative to market value of equity (BV/MV) outperform the market. This finding led to extensive testing for the value premium in developed countries around the world. Fama and French (1998a) tested it with data from twelve major European countries, as well as from Australia and the Far East. They found that between 1975 and 1995 in almost every country, value stocks delivered a higher return than growth stocks. The value premium has not been tested with the same vigor in third world or developing countries, which raises the question whether the value premium is only a first world phenomena and, if not, how third world value premiums compare to those found in developed countries. This paper compares the size of the value premium in the USA, UK, and some continental European countries with South African data.

Abstract: This paper examines the value relevance of financial statements variables namely net income, book value and cash flows simultaneously relative to Jordanian services and industrial firms for the period from 2000 to 2009. The main findings of this paper are three- dimensional. First, net income is value relevant, while book value and cash flows are irrelevant. Second, net income is more value relevant than book value and cash flows in both sectors. Third, this value relevance is greater in services sector than in industrial sector. The study shows that net income assist more in explaining market values in Jordanian services and industrial firms. Since research on the value relevance of these variables has neglected Jordan (and the Middle Eastern region), the study tries to fill this practical gap. The study is the first in Jordan that examines the value relevance of net income, book value and cash flows simultaneously and compares this value relevance according to Amman Stock Exchange sectors in one study in Jordan.

Abstract: With Value-Based ALM the financial policy is not only evaluated in terms of the uncertain future financial position and balance sheet, but also in terms of the exposure of the beneficiaries to the total risk embedded in the pension deal. Traditionally, ALM studies do not explicitly reveal which stakeholders bear the risks in the pension deal when the investment strategy changes or in case of pension redesign. Value-based ALM does. This chapter shows how to identify contingent claims and embedded options on the balance sheet of collective public schemes. We develop an econometric model which can be used for classic ALM and the consistent pricing of embedded options. We illustrate the framework in the context of pension redesign and in the context of asset management and demonstrate how the embedded options reveal risk transfers between employers and beneficiaries. We demonstrate how a switch from a calendar rebalancing to a fixed strategic asset allocation towards a more risk-driven dynamic asset allocation can increase the participant share in total risk, while the employer share in risk decreases substantially. Classic ALM optimizes the policy, while Value-Based ALM can be used to ensure that this takes place on fair economic terms between stakeholders.

Abstract: Purpose – This paper seeks to consider a significant market misconception and related errors commonly made by valuers, financial decision makers, and other users of valuation services. Its purpose is to focus on the importance of relating the explicit requirements of market value and fair value definitions to the evidence required for a supportable opinion of either.Design/methodology/approach – The paper provides conceptual foundations for the terms “market value” and “fair value” and reviews their meanings and applications in a historical context. Business cycles and the recent recession are used as foundations for illustrating how prices, such as for real estate, vary with cycles, but are not always directly indicative of either market value or fair value. The latter term has a long history, but has undergone recent definition and revision by the US Financial Accounting Standards Board (FASB) that are shown to closely align fair value with market value. A current controversy over the use of transaction...

Abstract: The informational content and relevance to external stakeholders of voluntary financial disclosures by commercial banks is now becoming more widely recognized. For instance, banks voluntary disclosures of liquidity, interest rate and market risk metrics have been bound to be closely associated with market value of equity and credit ratings. So far, there has been very scarce published research on investigating the informational content and relevance to external stakeholders of voluntary financial disclosures by life insurance companies. In order to improve upon this situation, this paper studies and reports the informational content of voluntary embedded value (EV) financial disclosures by Canadian life insurance companies. As opposed to traditional statutory balance sheet and earnings reporting, EV voluntary disclosure attempts to estimate the present value of future earnings generated by a life insurers current book of various insurance businesses. The preliminary results presented in this study indicate that EV voluntary financial disclosures communicate intrinsic informational content and provide value relevance to external stakeholders in the sense that they were found to be closely associated with life insurers market value of equity.

Abstract: 1. Background of the StudyGlobal meltdown provided some challenges to the Indian mark et. However, the huge potential of Life Insurance scenario in India is flourishing day by day. It is based on the demo graphic profile (young population), growth rate of premium, insurance penetration (4% of GDP) and as an investment destinatio n.1 India is one o f the fastest growing markets in the world map and its share has been rapidly growing over the years except the marginal decline in 2008. The life insurance scenario of India has immense scope in the world map as only twenty percent of total insurable population is covered in various life insurance schemes. Moreover, a study of Kerala's life insurance landscape is relevant since it has a significant position in adult literacy in Indian sub continent with an appreciable rate of 100 percent. According to 2001 census record o f the Government o f Kerala, the state has a population of around 319 millions (31,838,619) people which is approximately 3.44 per cent of the India's total p opulation. The density o f population in Kerala is 819 persons per square kilo meter which is three times higher than the national average of India. 2 Further, considering a holistic picture of Indian market, a study on understand the marketing orientation of life insurance marketers in Kerala.The annual report (2008-2009) of Insurance Regulatory Authority (IRDA) states insurance density of India as USD 47.4. The insurance penetration (insurance premium as per cent of Gross Domestic Product) signifies the level of insurance activity related to the size of the economy. As the GDP per capita raises, it is anticipated that the ind ividuals may be able to buy more insurance. The latest S wiss Re report reveals that the insurance penetratio n in India was 4.6 per cent in 2008 consisting of 4.0 per cent in life business and 0.6 per cent from non- life business, unchanged from 2007. 32. Holis tic M a rke ting Orie ntationA holistic marketing orientation of life insurance products captures the customer value proposition. The holistic marketing view is consolidating of value exp loration, value creation and value delivery activities with the purpose of building long-term, mutually satisfying relationships and co-prosperity among key stakeholders. Life insurance marketers strive to provide high level of product quality, service and speed. In this process they achieve profitable growth b y expanding customer share and constructing customer loyalty. A holistic marketing framework shows how the interaction between relevant actors, customers, company and collaborators and value based activities (value exploration, value creation and value delivery) helps to create, maintain and renew customer value. Highlighting this view, holistic marketers in life insurance industry in Kerala may succeed by managing a superior va lue chain that delivers a high leve l of product quality, service and speed. Additiona lly, an expansion of customer share, building customer loya lty, and capturing customer lifetime value are achieved by profitable growth.The holistic marketing framework is designed to address three key management questions:Value exploration - How can a company identify new value opportunities?Value creation - How can a company efficiently create more promising new value offerings?Value delivery - How can a company use its capabilities and infrastr ucture to deliver the new va lue o ffe rings more e ffic ie ntly?2.1. Value Explo rationIndian life insurance market, especially the market of Kerala is dynamic and competitive where different players search for opportunities that flow within and across market. Life Insurance Corporation o f India (LIC), the go vernmental giant is still in an unbeatable positio n in terms o f market share and penetration. However, due to the entry of various p rivate players in which majority operates with foreign collaboration has s ignificantly trying to capture the market share of LIC thro ugh well-defined strategies for value exploration. …

Abstract: This paper explores the sharing of value in business transactions. Although there is anincreased usage of the terminology of value in marketing (such concepts as value based selling and pricing), as well as in purchasing (value-based purchasing), the definition of the term is still vague. In order to better understand the definition of value, the author’s argue that it is important to understand the sharing of value, in general and the element of power for the sharing of value in particular. The aim of this paper is to add to this debate and this requires us to critique the current models. The key process that the analysis of power will help to explain is the division of the available revenue stream flowing up the chain from the buyer's customers. If the buyer and supplier do not cooperate, then power will be key in the sharing of that money flow. If buyers and suppliers fully cooperate, they may be able to reduce theircosts and/or increase the quality of the sales offering the buyer makes to their customer.

Abstract: Following IAS/IFRS, the current accounting regime for European life insurance companies is oriented towards delaying the recognition and distribution of profit, and is still largely rooted in requirements for statutory solvency reporting. But, since the late 1980s, some insurers and banks with life operations have voluntarily measured and reported within supplementary financial disclosure the value of in-force business, a forward-looking measure that captures the expected net value of the underlying contracts signed by the insurer as a component of equity (Embedded Value), and have calculated profits as the change in equity between two consecutive periods. In the recent years the concept of Embedded Value (EV) has been developed by the practitioners, first as European Embedded Value (EEV), and more recently as Market Consistent Embedded Value (MCEV). Right now EV disclosures are widely adopted by major European life insurance companies for supplementary performance reporting and increasingly by US insurers for management purposes. It has important implications for the international debate over the appropriate use of fair values in financial reporting and more specifically for the debate over the right design of accounting principles for life insurance contracts. This paper tests empirically the value relevance of the alternative “realistic reporting regime” of voluntary EV disclosures adopted by leading European insurers. We identified 28 European life insurers that in the period 2005-2010 provided voluntary EV disclosures. Data on EV’s have been handly collected, while for balance sheet information Compustat dataset has been used. Preliminary results are consistent with the value relevance of EV’s disclosures.

Abstract: Embodiments calculate a customized performance benchmark for a stable value fund by incorporating client-specific factors and calculating an overall crediting rate, as if the assets underlying the wrap contracts and insurance separate account contracts were invested in the market indices to which the fund's portfolio strategies are benchmarked, rather than being invested in the actual underlying portfolios of the fund. The resulting benchmark translates market benchmark returns into book value returns and resulting market value to book value ratios, to compare to the actual stable value fund performance. The crediting rate process accounts for the yields, durations, and returns of the market value benchmarks in addition to client-specific cash flows and market value to book value ratios.

Abstract: The informational content and relevance to external stakeholders of voluntary financial disclosures by commercial banks is now becoming more widely recognized. For instance, banks voluntary disclosures of liquidity, interest rate and market risk metrics have been found to be closely associated with market value of equity and credit ratings. So far, there has been very scarce published research on investigating the informational content and relevance to external stakeholders of voluntary financial disclosures by life insurance companies during the recent period of market turmoil. In order to improve upon this situation, this paper updates previous findings and reports on the informational content of voluntary embedded value (EV) financial disclosures by Canadian life insurance companies during the 2000-2010 time period. As opposed to traditional statutory balance sheet and earnings reporting, EV voluntary disclosure attempts to estimate the present value of future earnings generated by a life insurers current book of various insurance businesses. The preliminary results presented in this study indicate that recent EV voluntary financial disclosures failed to communicate intrinsic informational content and to provide value relevance to external stakeholders in the sense that they were not found to be closely associated with life insurers market value of equity and credit ratings during the recent 2007-2010 period of market turmoil.

Abstract: Using cash discount policy in accounts receivable management can effectively improve recycling arrears. Current research in this area mainly focuses on cash-discount-cost calculation and accountant processing. Booming development in financial engineering makes people have more and brand-new understanding of the connotation of market economy and more and more economic phenomena have been explained from the angle of financial essence. With the help of financial engineering fundamental theories, this paper puts forward an idea that there are embedded options in cash discount, whose value in essence will decrease with the passage of time. Therefore, the buyer chooses prepayment by credit policy and gets embedded value of the put options, which explains the motives of enterprises for cash discount.

Abstract: A computer system for processing data related to an annuity product, the annuity product having a contract value and a minimum interest rate, is configured to determine an amount of interest for crediting to the contract value based on the contract value and the value of the interest rate; determine a difference between the current value of an index independent of the value of any financial instrument and the prior period value of the index; based on the determined difference between the current value of the index and the prior period value of the index, determine a value of an additional amount for crediting to the contract value; and, based on the contract value, the amount of interest for crediting and the value of the additional amount for crediting, determine an updated contract value.

Abstract: Fair value is a measurement base found both in International Financial Reporting Standards and in Latvian accounting legislation. For the fair value measurements to be meaningful for financial analysts, consultants and other financial statement users, it is important that the fair value concept be understood in relation to other economic value concepts. The purpose of this paper is to compare the fair value concept of financial accounting to other economic value concepts. The qualitative method of logical analysis is the research methodology.

Abstract: After the split share structure reform, market value management is a listed company business philosophy major change of the latest trends Listed companies on China's market value of the rate for multiple regression analysis, it is concluded that the market value of the five big influence factor, which the company listed for exchange, the company by sector, results of operations, investor relations management and capital structure

Abstract: This paper investigates whether audit quality can increase the value relevance of fair value accounting.It is found that:(1) fair value accounting information has incremental value relevance;(2) Big 4 auditing firms can improve the value relevance of fair value accounting information.The result provides policy implications on how to improve the value relevance of fair value accounting in emerging markets.

Abstract: The puporse of this research is to analyze the impacts of derivatives to firm value. The sample of this research consists of 20 domestic life insurance companies and the duration of the research is the year between 2002 and 2009. And multi-regression analysis by cross-sectional analysis approach is used for the entire sample in this study. The result of the research indicates the impact of derivatives use on the value of the firm, which was the original focus of this study, is insignificant. And firm value increases as the leverage, rate of return on a loan, the ratio of product for annuity and the ratio of expense decrease.

Abstract: For the management focused on growth of value of the company is important not only ability to apply the standard methods to an assessment of the companies, but also that is more important, to possess tools of diagnostics of fair value of the company. It will allow to carry out the analysis of influence of the factors determining the value of the company to reveal the narrow links containing growth of value of the company. Results of diagnostics of fair value allow to position the company and to develop strategically the decisions leading to the real growth of value of the company. Therefore the problem of theoretical and technological study of questions and financial justification of strategic decisions on the basis of system diagnostics of financial and non-financial drivers of value of the company is essential.

Abstract: In this study, I have tried to analyze an influence of R&D investment on ROV(Real Option Value), corporate value and market value by analyzing R&D investment, ROV, corporate value and market value of machine and material industry in the perspective of ex post. As a result of this study, corporate value, which has been deduced by real option according to R&D investment, reflects market value well and possesses a strong correlation with R&D investment, ROV, corporate value and market value. This implication demonstrates this study result is corresponding with existing theories.

Abstract: The enterprise market value includes the fair value of net assets, the fair value of residual income, and the impact of Non-Economic Factors on share prices. In addition to the fair value of net assets, the measurement of enterprise excess profitability (Self-created Goodwill) could revise the differences between the fair value of financial statements' items and the stock value, and help the fair value to regain the value relevance. The Non-Economic Factors should be considered not only during the value relevance test, but also when to explain the results.

Abstract: I analyze Embedded Value (EV) reporting by firms with life insurance operations to assess the impact of unregulated financial reporting on transparency and to examine the institutional characteristics that promote unregulated reporting. Under EV accounting, the present value of future cash flows from in-force contracts is included in shareholders’ equity, and profit is calculated as the change in equity between two periods. In contrast to Generally Accepted Accounting Principles (GAAP), this approach produces higher shareholder's equity and recognizes income at contract inception. I find firms that adopt EV reporting exhibit a decline in information asymmetry, with the decline increasing as EV reporting evolves to address methodological deficiencies and to permit more comparability across firms. The decrease in information asymmetry is contingent on providing an audit certification, and larger for firms that commit to providing EV reports. Moreover, I document that EV reporting is more widespread in countries with more hostile takeovers, managers that do not avoid volatile income measures, regulators that are less likely to intervene in the product market, and analysts that believe EV disclosure increases the value of their information intermediation function.

Abstract: I analyze Embedded Value (EV) reporting by firms with life insurance operations to assess the impact of unregulated financial reporting on transparency and to examine the institutional characteristics that promote unregulated reporting. Under EV accounting the present value of future cash flows from in-force contracts is included in shareholders’ equity, and profit is calculated as the change in equity between two periods. In contrast to Generally Accepted Accounting Principles (GAAP), this approach produces higher shareholder’s equity and recognizes income at contract inception. I find firms that adopt EV reporting exhibit a decline in information asymmetry, with the decline increasing as EV reporting evolves to address methodological deficiencies and to permit more comparability across firms. The decrease in information asymmetry is contingent on providing an audit certification, and larger for firms that commit to providing EV reports. Moreover, I document that EV reporting is more widespread in countries with more hostile takeovers, managers that do not avoid volatile income measures, regulators that are less likely to intervene in the product market and analysts that believe EV disclosure to increase the value of their information intermediation function.

Abstract: In light of the recent exodus of foreign insurers from Taiwan and the local insurers’ outcries against the International Financial Reporting Standard (IFRS) 4 Insurance Contracts, we examine the value relevance of financial statements for life insurance firms, with particular interests to the embedded value (EV) disclosure. We find that the EV of equity has an incremental information role for book value of equity, which indicates that the accounting mismatching problem in the insurance industry creates a demand for fair value accounting. The fair value of liabilities under IFRS 4 Phase 2 has been disputed globally by accountants, actuaries, academia and regulators. The EV model is a concept approaching the fair value model. The research findings provide important empirical evidences supporting the fair value concept of IFRS 4.

Abstract: Purpose – Increasing pressure to reduce costs and skepticism of promised value‐added are forcing suppliers to produce tangible proof of the monetary value they create for customers. The academic literature on the practical activities related to value‐based selling remains sparse. This paper aims to bridge the gap between the abundant theoretical customer value frameworks and implementation practices to create a practical foundation for value‐based sales activities in firms that aim to become value creators.Design/methodology/approach – Based on two case studies, the authors map the best practices in customer value quantification from the point of view of industrial customers, and study value‐based sales processes to uncover the value‐based sales activities for implementing and profiting from customer value.Findings – The results suggest a customer‐focused sales process that centers on creating value, quantifying the value created, and creating a situation where customer and supplier maximize their utility...