Three essays on insurer loss reserve errors

My dissertation investigates three areas related to insurer loss reserve errors. Property/liability insurers are required to report revisions to their initial estimates of loss reserves for future claim payment. Comparing these revisions to the initial estimate creates a direct measure of managerial bias. I first examine whether firms manage loss reserves asymmetrically in response to deviations from a target financial strength rating. I find evidence of income-increasing earnings management for firms with actual ratings below their target, but no evidence of reserve management for firms at or above their target rating. In my second essay I examine whether reserve management related to executive compensation is consistent across ownership structures, and only find evidence of reserve management for stock insurers. Finally, I examine and find evidence to support the hypothesis that managerial style plays a role in determining reserve error magnitude and accuracy.