Actuaries, Conflicts of Interest and Professional Independence: The Case of James Hardie Industries Limited

Gunz, Sally; Laan, Sandra van der

doi:10.1007/s10551-010-0639-2

Cited by 7 publications

(5 citation statements)

References 14 publications

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“…Several conflicts of interest could arise for the professional independence of appointed actuaries as discussed by Gutterman () and the business ethics literature (Gunz et al, ; Gunz and Van der Laan, ). The general view is that actuaries face similar conflicts of interest that auditors faced before the reforms of the Sarbanes–Oxley Act (2002) were introduced, to address accounting scandals that surfaced at the time.…”

Section: Motivation and Research Questionmentioning

confidence: 99%

Actuarial Independence and Managerial Discretion

Kamiya¹,

Milidonis²

2016

J of Risk & Insurance

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Appointed actuaries are responsible for estimating the largest liability on property–casualty insurance companies’ balance sheet. Actuarial independence is crucial in safeguarding accurate estimates, where this independence is self‐regulated by actuarial professional institutions. However, professional conflicts of interest arise when appointed actuaries also hold an officer position within the same firm, as officer actuaries also face managerial incentives. Using a sample of U.S. insurers that employ in‐house appointed actuaries from 2007 to 2014, we find evidence that officer actuaries have different reserving practices than nonofficer actuaries. This difference in reserving is associated with tax shielding and earnings management incentives. Results are consistent with managerial discretion dominating actuarial independence; they are economically significant and should be of concern to regulators and professional institutions.

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Section: Motivation and Research Questionmentioning

confidence: 99%

Actuarial Independence and Managerial Discretion

Kamiya¹,

Milidonis²

2016

J of Risk & Insurance

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“…over 20 years. Subsequently, this actuarial estimate 19 proved to be problematic (Gunz and van der Laan, 2011) for several reasons including the omission of recent claims data (approximately 8 months) and the truncated (20 year) projection for future claims. The additional data and forward projections over a longer period were later found to yield much higher estimates (Jackson, 2004, p. 27) rendering the MRCF technically insolvent from inception.…”

Section: Strategic Valuationsmentioning

confidence: 99%

“…To explore the network of resources and constraints, we draw on prior research examining the James Hardie case. These accounts have considered: legal aspects (Dunn, 2005;Jackson, 2004;Prince et al 2004;Spender, 2003;; societal and ethical implications (Gunz and van der Laan, 2011;Haigh, 2006;Peacock, 2009); management communications (Moerman and van der Laan, 2007;Moerman and van der Laan, 2011); and, the management of long-tail risk (Moerman and van der Laan, 2012). This paper differs from previous accounts by offering an approach that exposes accounting as a pivotal element in one of the most important events in Australian corporate history.…”

Section: Introductionmentioning

confidence: 99%

Silencing the noise: Asbestos liabilities, accounting and strategic bankruptcy

Moerman

Laan

2015

Critical Perspectives on Accounting

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The full-text may be used and/or reproduced, and given to third parties in any format or medium, without prior permission or charge, for personal research or study, educational, or not-for-prot purposes provided that:• a full bibliographic reference is made to the original source • a link is made to the metadata record in DRO • the full-text is not changed in any way The full-text must not be sold in any format or medium without the formal permission of the copyright holders.Please consult the full DRO policy for further details. AbstractThe legacy of the global exploitation of asbestos provides an illustrative case to examine corporate strategy in response to the significant financial risk presented by the long-tail liability.The James Hardie group was the dominant asbestos manufacturing concern in Australia and, confronted with the uncertainties of burgeoning long-tail tort claims, embarked on a radical corporate reorganization. At the centre of the reorganization was the creation of a business unit of limited potential to separate asbestos long-tail liabilities from the profitable operations of the corporate group and locate the risk in an alternate legal arena. The strategic recognition of accounting assets and liabilities to construct a 'bottom line' and shift organizational boundaries is explored using Delaney's theory of strategic bankruptcy. This interdisciplinary and critical sociological lens highlights the power of organizations to exploit the malleability of accounting concepts to pursue their strategic goals.

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“…These 64 papers apply quantitative methods to archival, experimental and survey data, indicating there has been little in the way of qualitative empirical analysis in this sample of research. Only four studies are based on interviews (Beggs and Dean, 2007;Hoffman et al, 2008;Puyou and Faÿ, 2015;Schwartz, 2004) and one on a case study (Gunz and van der Laan, 2011). If we wish to understand the reasons why individuals act (or choose not to act) ethically, then an argument exists for examining how decisions to act ethically are made.…”

Section: Discussion and Future Research Opportunitiesmentioning

confidence: 99%

Review of SOX in the business ethics literature

Gordon

Nazari

2018

MAJ

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Purpose This paper aims to examine the impact of the Sarbanes–Oxley Act of 2002 (SOX) on the academic business ethics literature with the intent of making this research more accessible to those researchers and practitioners working in business ethics and other related fields. Specifically, the authors outline the types and scope of SOX-related research, examine the extent of reliance on SOX, identify which theoretical frameworks and research approaches are used and point out under-researched areas. Design/methodology/approach Using a descriptive approach, the authors examine the theoretical perspectives, classifying these perspectives into four groupings (economics, ethics/moral, psychological and sociological). Using counts, categorization and content analyses, the authors provide an overview of 115 articles with further analysis provided for articles relying heavily (n = 14) or moderately (n = 42) on SOX. Findings Whistleblowing and codes of ethics are well-researched topics. However, employment of some theories (e.g. signaling theory and stakeholder theory) and qualitative approaches are used less often. Other under-researched issues in the sample include CEO/CFO certifications, cost of compliance, auditor disclosures and empirical investigation of SOX and auditor independence (or corporate culture). Research limitations/implications The authors’ decision to use certain databases, search terms and research methods, and to focus on business ethics journals and English language articles are possible limitations. Originality/value The authors’ contributions comprise an examination of the scope of SOX topics and detailing how reliant the research is on SOX. The authors identify trends in this literature and provide evidence of the broad theoretical frameworks to better understand the breadth and depth of theories used.

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Actuaries, Conflicts of Interest and Professional Independence: The Case of James Hardie Industries Limited

Abstract: conflicts of interest, actuaries, professional independence, virtue ethics, James Hardie Industries Limited,

Cited by 7 publications

References 14 publications

Actuarial Independence and Managerial Discretion

Actuarial Independence and Managerial Discretion

Silencing the noise: Asbestos liabilities, accounting and strategic bankruptcy

Review of SOX in the business ethics literature

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