Journal article
Determinants of Corporate Diversification: Evidence From the Property-Liability Insurance Industry
The Journal of risk and insurance, Vol.79(2), pp.381-413
06/2012
DOI: 10.1111/j.1539-6975.2011.01423.x
Abstract
This article analyzes variations in line-of-business diversification status and extent among propertyliability insurers. Our results show that the extent of diversification is not driven by risk pooling considerations; insurers operating in more volatile business lines do not diversify more. Diversification can rather be explained by the benefits of internal capital markets and barriers to business growth like market size and concentration. In our analysis, we distinguish between related and unrelated diversification. Using a measure of unrelated line-of-business diversification we find the first support for the diversification prediction of the managerial discretion hypothesis that mutual insurers should be less diversified than stock insurers. While mutual insurers tend to exhibit higher levels of total diversification, they engage in significantly less unrelated diversification than do stock insurers.
Details
- Title: Subtitle
- Determinants of Corporate Diversification: Evidence From the Property-Liability Insurance Industry
- Creators
- Thomas R. Berry-Stoelzle - University of GeorgiaAndre P. Liebenberg - University of MississippiJoseph S. Ruhland - Georgia Southern UniversityDavid W. Sommer - University of Mississippi
- Resource Type
- Journal article
- Publication Details
- The Journal of risk and insurance, Vol.79(2), pp.381-413
- Publisher
- Wiley
- DOI
- 10.1111/j.1539-6975.2011.01423.x
- ISSN
- 0022-4367
- eISSN
- 1539-6975
- Number of pages
- 33
- Language
- English
- Date published
- 06/2012
- Academic Unit
- Finance
- Record Identifier
- 9984380520602771
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