Journal ArticleDOI
Optimal Capital Utilization by Financial Firms: Evidence from the Property-Liability Insurance Industry
J. David Cummins,Gregory P. Nini +1 more
TLDR
This paper investigated the use of capital by insurers to provide evidence on whether the capital increase represents a legitimate response to changing market conditions or a true inefficiency that leads to performance penalties for insurers.Abstract:
Capitalization levels in the property-liability insurance industry have increased dramatically in recent years—the capital-to-assets ratio rose from 25% in 1989 to 35% by 1999. This paper investigates the use of capital by insurers to provide evidence on whether the capital increase represents a legitimate response to changing market conditions or a true inefficiency that leads to performance penalties for insurers. We estimate “best practice” technical, cost, and revenue frontiers for a sample of insurers over the period 1993–1998, using data envelopment analysis, a non-parametric technique. The results indicate that most insurers significantly over-utilized equity capital during the sample period. Regression analysis provides evidence that capital over-utilization primarily represents an inefficiency for which insurers incur significant revenue penalties.read more
Citations
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Journal ArticleDOI
Analysis of insurers' performance using frontier efficiency and productivity methods. The great contributions by David Cummins and Mary Weiss
TL;DR: Cummins and Weiss as discussed by the authors provided an in-depth analysis of the great contributions by J. David Cummins and Mary A. Weiss to research on insurers' performance using frontier efficiency and productivity methods.
Dissertation
Debt as a value creation tool in the short-term insurance industry
Abstract: ............................................................................................................... ii DECLARATION .......................................................................................................... iii ACKNOWLEDGEMENTS .............................................................................................. iv 1. RESEARCH PROBLEM ......................................................................................... 1 1.
Journal ArticleDOI
The Roadmap Of Productivity And Productivity Changes Of Indian Non-Life Insurance Companies: A Study Using Bootstrapped Malmquist Model
Abhijit Sinha,Tagar Lal Khan +1 more
Journal ArticleDOI
Determinants of Diversification for Non-Life Insurance Companies in Spain
TL;DR: In this article, the authors provide evidence on the determinants of the diversification status as well as the extent of diversification for Spanish non-life insurers in the period 2000-2007.
References
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Journal ArticleDOI
Theory of the firm: Managerial behavior, agency costs and ownership structure
TL;DR: In this article, the authors draw on recent progress in the theory of property rights, agency, and finance to develop a theory of ownership structure for the firm, which casts new light on and has implications for a variety of issues in the professional and popular literature.
Journal ArticleDOI
Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis
TL;DR: The CCR ratio form introduced by Charnes, Cooper and Rhodes, as part of their Data Envelopment Analysis approach, comprehends both technical and scale inefficiencies via the optimal value of the ratio form, as obtained directly from the data without requiring a priori specification of weights and/or explicit delineation of assumed functional forms of relations between inputs and outputs as mentioned in this paper.
Posted Content
Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers
TL;DR: In this paper, the benefits of debt in reducing agency costs of free cash flows, how debt can substitute for dividends, why diversification programs are more likely to generate losses than takeovers or expansion in the same line of business or liquidationmotivated takeovers, and why the factors generating takeover activity in such diverse activities as broadcasting and tobacco are similar to those in oil.
Journal ArticleDOI
Corporate financing and investment decisions when firms have information that investors do not have
TL;DR: In this paper, a firm that must issue common stock to raise cash to undertake a valuable investment opportunity is considered, and an equilibrium model of the issue-invest decision is developed under these assumptions.
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Ownership Structure across Lines of Property-Casualty Insurance
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