Topic
Embedded value
About: Embedded value is a research topic. Over the lifetime, 343 publications have been published within this topic receiving 8853 citations.
Papers published on a yearly basis
Papers
TL;DR: Serafeim et al. as discussed by the authors examined the determinants and economic consequences of embedded value reporting, a voluntary disclosure arrangement in the life insurance industry, and found 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.
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.
18 citations
Book•
1 Jan 1999
17 citations
24 Feb 2014
TL;DR: In this paper, the value of a firm in computerized business gaming simulations can be determined through five different measures: book value, market value, capitalized value, deductive judgment, and adjusted net worth.
Abstract: The value of a firm in computerized business gaming simulations can be determined through five different measures: book value, market value, capitalized value, deductive judgment, and adjusted net worth. The firm’s book value may be an unreasonable measure of its true value because of the idiosyncrasies of accounting. True market value may be unavailable or unreliable. The capitalized value measure requires an arbitrary parameter, the deductive judgment measure requires subjective judgment, and the adjusted net worth measure requires detailed knowledge of the gaming simulation’s model. Developers are in the best position to apply the adjusted net worth measure, so they should code it into their simulation’s computer programs.
17 citations
TL;DR: In this article, the authors describe the correlation between profitability and company value, based on the problem and purpose research, the research is designed as quantitative research, and empirical results show that profitability variability explains change of company value.
Abstract: Maximizing the value of the company is one of the financial issues are interesting to study. Profitability is one of the factors that influence value of enterprise be in accordance with asset and equity owned. The purpose of this research is to describe the correlation between profitability and company value. Based on the problem and purpose research, the research is designed as quantitative research. Secondary data used as the basis for the analysis was obtained from ICMD with observation period of 5 years to 10 companies. Data analyzed by using linear regression multiple analyses. Empirical results show that profitability variability explains change of company value. Return on Investment and Return on Equity has positive and significant effect on company value, but Net Profit Margin negatively and significantly affects company value.
16 citations
1 Jan 2013
TL;DR: In this paper, the authors show how the corporation may use insurance to solve underinvestment and risk-shifting problems; the analysis includes a new simpler proof of how the risk shifting problem may be solved with corporate insurance.
Abstract: Ever since Mayers and Smith first claimed, 30 years ago, that the corporate form provides an effective hedge that allows stockholders to eliminate insurable risk through diversification, the quest to explain the corporate demand for insurance has continued. Their claim is demonstrated here so that the corporate demand for insurance may be distinguished from the individual’s demand for insurance. Then some of the determinants of the demand for corporate insurance that exist in the literature are reviewed and generalized. The generalizations show how the corporation may use insurance to solve underinvestment and risk-shifting problems; the analysis includes a new simpler proof of how the risk-shifting problem may be solved with corporate insurance. Management compensation is also introduced here and the analysis shows the conditions which motivate the corporate insurance decision. Finally, some discussion is provided concerning the empirical implications of the extant theory, the tests that have been made, and the tests that should be made going forward.
16 citations
Related Topics (5)
Performance Metrics
| Year | Papers |
|---|---|
| 2021 | 3 |
| 2020 | 2 |
| 2019 | 2 |
| 2018 | 3 |
| 2017 | 14 |
| 2016 | 20 |