Identity narratives under threat: A study of former members of Arthur Andersen

This paper examines the processes by which individuals work their sense of organizational and professional identity in the aftermath of a professional failure. Drawing on twenty-five interviews carried out with former members of Arthur Andersen who mostly worked for the firm in Canada and the United Kingdom, we investigate interviewees’ identity work ensuing from the breakdown of the firm. Specifically, identity work comprises processes by which individuals reflectively seek to maintain or revise their sense of identification with the AA organization and also with the public accounting profession, along with developing self-understandings regarding causes and consequences ensuing from the firm’s collapse. Our analysis indicates that four interpretive schemes or patterns mainly characterize interviewees’ identity work: disillusion; resentfulness; rationalization; and hopefulness. Each of these patterns can be viewed as conveying a distinct representation of what “truly” happened within AA. In this sense, identity work, sense-making and truth contests are inextricably linked altogether. Moreover, the present paper underlines the pertinence of studying entangled processes of identity work and sense-making in order to better understand how broader social forces or discourses (e.g., commercialization and risk) are experienced and translated by the self in the context of identity-threatening events. That is, the identity work/sense-making nexus constitutes a relevant theoretical anchoring to study the circulation of discourses in society.     

Insurance Market Effects of Risk Management Metrics

We extend the classical analysis on optimal insurance design to the case when the insurer implements regulatory requirements (Value-at-Risk). Presumably, regulators impose some risk management requirement such as VaR to reduce the insurers’ insolvency risk, as well as to improve the insurance market stability. We show that VaR requirements may better protect the insured and improve economic efficiency, but have stringent negative effects on the insurance market. Our analysis reveals that the insured are better protected in the event of greater loss irrespective of the optimal design from either the insured or the insurer perspective. However, in the presence of the VaR requirement on the insurer, the insurer's insolvency risk might be increased and there are moral hazard issues in the insurance market because the optimal contract is discontinuous.     

Optimal Reinsurance Arrangements Under Tail Risk Measures

Regulatory authorities demand insurance companies control their risk exposure by imposing stringent risk management policies. This article investigates the optimal risk management strategy of an insurance company subject to regulatory constraints. We provide optimal reinsurance contracts under different tail risk measures and analyze the impact of regulators' requirements on risk sharing in the reinsurance market. Our results underpin adverse incentives for the insurer when compulsory Value-at-Risk risk management requirements are imposed. But economic effects may vary when regulatory constraints involve other risk measures. Finally, we compare the obtained optimal designs to existing reinsurance contracts and alternative risk transfer mechanisms on the capital market.     

Ethics and Well-Being: The Paradoxical Implications of Individual Differences in Ethical Orientation

Following on theoretical work and studies that assert a relationship between unethical activities and diminished well-being, and a common belief that those more ethically inclined experience greater well-being, the present study examined whether individual differences in ethical orientation may be associated with the experience of well-being. This paper reports the findings of two separate studies showing that individual differences in moral attentiveness, moral identity, idealism, relativism, and integrity were associated with differences in a wide range of well-being measures. Of particular significance is not all ethical orientations were found to contribute to well-being. In fact, some negatively impacted individual levels of well-being. Implications for integrating these new findings into existing ethical theory and considerations for future research are explored.     

Development and Pricing of a New Participating Contract

Abstract

This article designs and prices a new type of participating life insurance contract. Participating contracts are popular in the United States and European countries. They present many different covenants and depend on national regulations. In the present article we design a new type of participating contract very similar to the one considered in other studies, but with the guaranteed rate matching the return of a government bond. We prove that this new type of contract can be valued in closed form when interest rates are stochastic and when the company can default.     

Sustainability Ratings and the Disciplinary Power of the Ideology of Numbers

The main purpose of this paper is to better understand how sustainability rating agencies, through discourse, promote an “ideology of numbers” that ultimately aims to establish a regime of normalization governing social and environmental performance. Drawing on Thompson’s (Ideology and modern culture: Critical social theory in the era of mass communication, 1990) modes of operation of ideology, we examine the extent to which, and how, the ideology of numbers is reflected on websites and public documents published by a range of sustainability rating agencies. Our analysis indicates that the ideology of numbers promotes a relatively narrow vision of corporate social and environmental responsibility. That is, it establishes some areas of visibility while leaving in the shadow certain aspects of the ways in which companies fulfill, or fail to meet, their social and environmental responsibilities. The ideology of numbers also exerts power by identifying those companies that are deemed to be worthy of inclusion, or not, in a supposedly socially responsible corporate elite.     

The Production of Goods in Excess of Demand: A Generalization of Self-Protection

We consider a risk-averse firm producing a limited number of goods that can be defective. The firm must determine its level of production before knowing which goods will be defective. Such is the case, for example, for a producer of telecommunications satellites. The problem under scrutiny can be interpreted as a generalization of self-protection for more than two states of nature. In our model, the firm determines jointly its level of production and its demand for insurance. It is shown that, under reasonable assumptions, the two strategies are complements.     

On financial guarantee insurance under stochastic interest rates

We extend the financial guarantee insurance literature by modeling, under stochastic interest rates, private financial guarantees when the guarantor potentially defaults. By performing numerical simulations under plausible parameters values, we characterize the differential impact of the incorporation of stochasticity of interest rates on the valuation of both public and private guarantees.