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We use a panel data set of UK-listed companies over the period 2005 to 2009 to analyse the actuarial assumptions used to value pension plan liabilities under IAS 19. The valuation process requires companies to make assumptions about financial and demographic variables, notably discount rate, price inflation, salary inflation, and mortality/life expectancy of plan members/beneficiaries.We use regression analysis to analyse the relationships between these key assumptions (except mortality, where disclosures are limited) and companyspecific factors such as the pension plan funding position and duration of pension liabilities. We find evidence of selective 'management' of the three assumptions investigated, although the nature of this appears to differ from the findings of US authors. We conclude that IAS 19 does not prevent the use of managerial discretion, particularly by companies whose pension plan funding positions are weak, thereby reducing the representational faithfulness of the reported pension figures. We also highlight that the degree of discretion used reflects the extent to which IAS 19 defines how the assumptions are to be determined. We therefore suggest that companies should be encouraged to justify more explicitly their choice of assumptions.

This paper provides cross-country evidence on the association between soundness and competition in the life insurance industry where competition is measured by the Boone indicator. We analyze 10 European Union (EU) life insurance markets over the postderegulation period 1999-2011. The results indicate that competition increases the soundness of the EU life insurance markets but incentivizes EU life insurers to hold less capital. Since the Boone indicator measures competition based on the reallocation of profits from inefficient insurers to efficient ones, our results suggest that efficiency is the mechanism through which competition contributes to insurer solvency. The soundnessenhancing effect of competition is greater for weak insurers than for healthy ones. Results show that competition on average decreased in the years after the financial crisis.

This paper provides cross-country evidence on the association between soundness and competition in the life insurance industry where competition is measured by the Boone indicator. We analyze 10 European Union (EU) life insurance markets over the postderegulation period 1999-2011. The results indicate that competition increases the soundness of the EU life insurance markets but incentivizes EU life insurers to hold less capital. Since the Boone indicator measures competition based on the reallocation of profits from inefficient insurers to efficient ones, our results suggest that efficiency is the mechanism through which competition contributes to insurer solvency. The soundnessenhancing effect of competition is greater for weak insurers than for healthy ones. Results show that competition on average decreased in the years after the financial crisis.

We decompose initial returns into deliberate premarket underpricing and aftermarket mispricing using Stochastic Frontier Analysis. We model deliberate underpricing as a function of proxies of information asymmetry surrounding IPO value between market participants. Equity retained is an unlikely signalling mechanism to convey IPO value to outside investors through deliberate premarket underpricing. The presence of lock-in agreements, underwriter fees, number of uses of proceeds, and venture capital or private equity backing have positive impacts on deliberate premarket underpricing. Demand for firms' capital also explains deliberate premarket underpricing, whereas new issues market conditions have no impact. All these factors are found to explain a significant fraction of the variations in our deliberate underpricing estimates. Deliberate underpricing is the more dominant component that makes up initial return when compared to the fraction of aftermarket mispricing. We attribute aftermarket mispricing to trading volume in IPO shares on the first day, price adjustment between the filing price range and the offer price, and offer size. Equity retained explains the aftermarket mispricing rather than the deliberate premarket underpricing in contradiction to the signalling argument. More reputable underwriters are likely to provide price support in the early aftermarket, whereas we observe no impact on deliberate premarket underpricing.Keywords: Initial IPO return, deliberate premarket underpricing, aftermarket mispricing JEL: G12, G23, G32 2 IntroductionAn initial public offering (IPO) is the first sale of shares by a private company to the public on a securities exchange. The valuation of shares of an unlisted company is challenging due to the absence of current market prices and trading history. Information asymmetry between market participants surrounding the value of these shares leaves the new issues market subject to Akerlof's (1970) Average initial return is the equally-weighted mean of the percentage change from the offer price in the premarket to the aftermarket price. Quarterly data on initial return and the number of IPOs are compiled from monthly observations available from Jay Ritter's website (http://bear.warrington.ufl.edu/ritter). 2 1 Initial return is the percentage change from the offer price to the market price in the aftermarket. See, for example, Table 1 in Banerjee, Dai, and Keshab (2011), Table 6 in Ritter (2003), and Jay Ritter's web site (http://bear.warrington.ufl.edu/ritter) that has regular updates of Table 1 in Loughran, Ritter, and Rydqvist (1994). 2 This is the URL address for all future references to Jay Ritter's IPO website. 1980q1 1981q1 1982q1 1983q1 1984q1 1985q1 1986q1 1987q1 1988q1 1989q1 1990q1 1991q1 1992q1 1993q1 1994q1 1995q1 1996q1 1997q1 1998q1 1999q1 (1998) and Aggarwal (2000Aggarwal ( , 2003 find that underwriters stabilize the aftermarket prices at the offer price which results in very few IPO stocks being overpriced.3 'Premarket' indicates the time lea...