Study On The Matching Of Revenues And Expenses Of Life Insurance Companies In China

The matching principle is one of the basic principles of accounting and it plays an important guiding role in the process of business accounting.Under the Accrual basis,the matching principle requires an one-to-one match between revenues and expenses during the accounting period.Perfect matching between revenues and expenses can accurately reflects business performance of an enterprise.Thus,the matching of expenses to revenues has great impact on the earnings quality information of enterprise accounting.But the life insurance industry is different from the general industry due to its management characteristics and there is also a difference in the degree of emphasis on the matching principle.In order to research the matching between revenues and expenses of life insurance companies in China,this study investigates the recent matching trend of life insurance companies and the influence on the earnings equality.This paper focus on domestic life insurance companies in china and use life insurance companies' financial data to study the matching trend of revenues to expenses from 2003 to 2015.The paper also takes the reform of accounting system as the standard of division to estimating the matching coefficient and its changing trend in different periods.Moreover,the paper uses some indicators to analyze the trend of earnings equality of life insurance companies and compare it with the above changing matching trend.Finally,the paper builds different sub samples by changing the sample structure to repeating empirical research.Not only conducting robustness test on the research results,but also making comparative analysis on excluding investment gains,domestic and foreign life insurance companies and whether they are listed company or not.With the empirical research,the reserch find that the matching coefficients of revenues and expenses of life insurance companies in China shows a trend of decreasing first,then rising and decreasing overall and the trend of earning quality is related to matching coefficients.The paper proves the robustness of the results through robustness test and present that earnings structure,capital structure and list are the key factors of life insurance companies' earning quality.