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A Study on Value Relevance of Solvency Margin Ratio and Operational Efficiency in the Non - life Insurance Companies

cho, seok-hee 1

1안동대학교

Accredited

ABSTRACT

This study empirically examined the value relevance of non-life insurance companies' solvency margin ratio(hereafter 'SMR') and operational efficiency using the samples consisting non-life insurance companies listed on the Korean Stock Exchange. The results are as follow; First, there is a positive association between the SMR and firm's value after controlling for firm's equity book value and net income, but the relative value relevance of SMR is not significantly higher than debt ratio. Second, this paper provide a empirical evidence that DEA efficiency measure has a incremental value relevance which equity book value and net income have not, but DEA efficiency measure is significantly lower than statutory efficiency measure(earned-incurred loss ratio and net expense ratio). This study has a significant meaning because the incremental and relative value relevance of the SMR and DEA efficiency measure in the non-life insurance industry were directly analysed in this paper, differently from previous studies.

Citation status

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