On accounting standards and fair valuation of life insurance and pension liabilities

The actuarial profession is increasingly teaming up with financial economists for a fruitful cooperation on the proper valuation of life insurance and pension (L&P) liabilities. This has been a natural consequence of a recent sharply increased focus on market values in financial reports of L&P companies from regulators, standard setters, the financial press, stakeholders, and others with an interest in the L&P business.

This article provides a financial economist's point of view on recent developments in relation to the fair valuation of L&P liabilities. The role of accounting standards and the background for the international harmonization in this field are first discussed. We then review and explain the concept of fair value and provide a general view on appropriate techniques for estimating fair values of L&P liabilities in accordance with the definition of the concept. The paper also contains a section which briefly reviews recent and quite innovative regulatory initiatives in relation to market value reporting in the Danish market for life and pension insurance.     

Job Loss and Entrepreneurship

We examine the impact of job loss on entrepreneurship behaviour. Our identification strategy relies on the use of mass layoffs caused by bankruptcies as indicators of exogenous displacement. Building on Norwegian register data, we find that working in a company which is going to close down due to bankruptcy in the near future raises the subsequent entrepreneur propensity by 155% for men and 180% for women, compared to working in a stable firm. These estimates are much larger than previously reported in the literature. Taking into account that many workers lose their jobs in the comparison group of stable firms also, we suggest that the full effects of displacement are even larger.     

Comparison of Methods for Evaluation of the Convolution of Two Compound R 1 Distributions

In the present paper we compare four methods for evaluating the convolution of two compound R 1 distributions by counting the numbers of elementary algebraic operations required. Two of the methods are applicable in general, whereas the remaining two are restricted to the case when the two compound distributions have the same severity distribution. This case is discussed separately. We consider in particular the special case when this common severity distribution is concentrated in one, that is, evaluation of the convolution of two R 1 distributions.     

Ecotour Guide Training in Less Developed Countries: Some Preliminary Research Findings

This paper presents a critical discussion of the internationally prevailing understanding of the concept 'sustainable tourism'. It is argued that the current focus on stationary activities and local, intensive environmental issues is too limited both in relation to the concept of tourism and the concept of sustainable development. There is no tourism without travel. And, as shown in a Norwegian research study, tourist travel is a major source of serious environmental problems. The paper emphasises that sustainable tourism should be linked to a concept of sustainable mobility. However, this mobility would imply not only a change in the means of transport but also a reduced level of mobility in the rich part of the world. As this would entail new forms of tourism, other than those solely based on auto- and aeromobility, it represents a major challenge for the future development of tourism.     

The Path to Service Encounter Performance in Public and Private ‘Bureaucracies’

This article examines the evolution of building societies against a background of environmental change. By the application of specific analytical measures developed by Ansoff five distinct periods of change can be isolated. Key events in the environment have become progressively more novel, less predictable and costlier to deal with, which, in turn, has necessitated both operational and strategic redirection.     

The distributional impact of public services when needs differ

Despite a broad consensus on the need to take into account the value of public services in distributional analysis, there is little reliable evidence on how inclusion of such non-cash income actually affects poverty and inequality estimates. In particular, the equivalence scales applied to cash income are not necessarily appropriate when including non-cash income, because the receipt of public services is likely to be associated with particular needs. In this paper, we propose a theory-based framework designed to provide a coherent evaluation of the distributional impact of local public services. The valuation of public services, identification of target groups, allocation of expenditures to target groups, and adjustment for differences in needs are derived from a model of local government spending behaviour. Using Norwegian data from municipal accounts and administrative registers we find that the inclusion of non-cash income reduces income inequality by about 15% and poverty rates by almost one-third. However, adjusting for differences in needs for public services across population subgroups offsets about half the inequality reduction and some of the poverty decrease.     

Explaining the size differences of exporter premia: theory and evidence

Two decades of research have established pronounced exporter productivity premia (EPP) and exporter size premia (ESP). Yet, we do not know why such exporter premia differ so widely in magnitude across countries or sectors? We take this question to the theory and to the data. We derive the sectoral EPP and ESP in a standard heterogeneous firms trade model and apply the insights from the model to guide our empirical investigation of detailed Danish firm-level data. We show that a significant share of the observed variation in EPP and ESP across sectors can be accounted for by sector differences in the underlying variation in productivity dispersion, variable trade costs, the ratio of fixed export costs to fixed costs of production, and the elasticity of demand.     

Building foreign brand personalities in Russia: the moderating effect of consumer ethnocentrism

Based on a survey of Western brands in Russia, three contributions are offered to the literature on international brand-building. First, the Aaker brand personality scale (Aaker 1997) was tested in a Russian context. Important similarities and differences between Western and Russian brand personality perceptions were identified. Second, the results show that brand personalities of Western brands also have an impact on brand attitudes among Russian consumers. Third, and most importantly, it is demonstrated that the effect of Western brand personalities is heavily moderated by consumer ethnocentrism. Specifically, only low-ethnocentric consumers are influenced by foreign brand personalities.