THE PERFORMANCE OF CORPORATE MERGERS IN JAPAN

This paper presents an objective and systematic analysis of the performance of corporate mergers in Japan. Two types of tests are provided. One is to compare fmancial ratios of merging firms before and after the merger. Negative effects of mergers are verified. The other is to compare the financial performances of merging and nonmerging firms before and after the merger in the same industry. No clear distinction is obtained between them. General comparisons between merging and nonmerging fms indicate negative effects of mergers.     

MEASURING THE PROFITABILITY OF UK PROPRIETARY LIFE INSURERS

This paper compares and evaluates various legal and economic methods to measure and report UK life insurance company profitability in terms of their (i) treatment and recognition of profits emerging from life insurance business over time; and (ii) compliance with «true and fair view» requirements of the Companies Act and the concepts set out in the Accounting Standards Board («ASB») proposedStatement of Principles. A simple life insurance policy model is used to demonstrate the differential impact of each method on the pattern of profit recognition over time. Legal methods of reporting «profit» used by the UK industry to comply with conservative UK solvency regulations fail to provide inventors with insight into the value of the business. Economic methods provide a more «realistic» basis for reporting to shareholders by incorporating discounted future profits into the value of life insurance business, but these do not accord with the European Union Insurance Accounts Directive («IAD»). A legal «earned profits» method, although not endorsed by the industry, is the only one that appears to provide a «true and fair view» as envisaged by the Companies Act and meet the objectives of the ASB. Various outstanding issues between the industry-endorsed economic methods and the ASB's requirements are discussed.