Corporate reporting practic

Abstract

Insurance sector is an emerging sector in India. Entry of private and foreign insurance companies has created highly competitive and volatile environment in the insurance market. In such an environment, a transparent system of financial reporting is necessary to protect the interests of policyholders and other stakeholders. Present study, Corporate Reporting Practices of Insurance Sector in India is conducted to analyze the financial reporting practices of life and general insurance companies. The study is based on the annual reports of Indian insurance companies for a period of 8 years i.e. from 2002-03 to 2009-10. Various indexes i.e. mandatory disclosure index, voluntary disclosure index and index relating to corporate governance items are constructed. Unweighted disclosure scores are used to analyze the financial reporting practices of these companies. Effect of various company attributes on extent of disclosure has also been studied. Results of the study show that public sector companies are having better disclosure scores than private sector in both life and general insurance industry. When general and life insurance sector compared as a whole the disclosure is better in general insurance than life insurance sector. Mandatory and voluntary disclosures have highly positive association with size of the company, net premium and age of the company and negative association with net profit in majority of the life insurance companies. But in general insurance companies all the four attributes are highly and positively associated with mandatory as well as voluntary disclosure. Multiple regression results show that in life insurance companies net premium and in general insurance companies age of the company has the highest impact on extent of disclosure. Corporate governance disclosure is better in general insurance companies as compared to life insurance companies.