Journal ArticleDOI
The effect of captive insurer formation on stock returns: An empirical test from the UK
Mike Adams,David Hillier +1 more
Reads0
Chats0
TLDR
In this article, the authors examined the stock market impact of captive insurance subsidiary formation on parent companies in the United Kingdom (UK) corporate sector and found that the formation of an insurance captive has no effect on the financial, systematic and unsystematic risks of the parent company, irrespective of a parent's market capitalisation.Abstract:
This paper examines the stock market impact of captive insurance subsidiary formation on parent companies in the United Kingdom (UK) corporate sector. We report that the formation of an insurance captive has no effect on the financial, systematic and unsystematic risks of the parent company, irrespective of the parent's market capitalisation. In addition, there is weak evidence that the market has a negative view of the captive insurance decision. Finally, our results indicate that financial risk, agency costs of free cash flow, asymmetric information and market power have no effect on the stock market's reaction to the captive formation decision.read more
Citations
More filters
Journal ArticleDOI
The Effects of Board Composition and Board Size on the Informativeness of Annual Accounting Earnings
TL;DR: In this article, the authors examined whether the information-usefulness of annual accounting earnings varies with the fraction of outside directors serving on the board and board size, and found that earnings informativeness is negatively related to board size but is not related to the number of outside board members serving.
Journal ArticleDOI
Corporate ownership, equity risk and returns in the People's Republic of China
Hong Zou,Mike Adams +1 more
TL;DR: Li et al. as mentioned in this paper investigated the effect of other forms of corporate ownership on a firm's equity risk (measured as the volatility of a company's stock returns) and stock returns in the People's Republic of China (PRC).
Journal ArticleDOI
Corporate Risks and Property Insurance: Evidence From the People's Republic of China
Hong Zou,Mike Adams,Mike Buckle +2 more
TL;DR: Li et al. as mentioned in this paper empirically tested the linkage between corporate risks and the decision to purchase property insurance and its financial extent using panel data (1997-1999) for 235 publicly listed companies in the People's Republic of China.
Journal ArticleDOI
Reinsurance and corporate taxation in the United Kingdom life insurance industry
TL;DR: In this article, tax-related arguments regarding the use of reinsurance were tested using data for a sample of United Kingdom (UK) life insurance firms and they found that UK life insurers with low before-planning marginal tax rates tend to use more reinsurance; in contrast, tax convexity is found to have no significant impact on the purchase of reins insurance and so the volatility-reduction argument is not supported.
Dissertation
How does the life insurance business perform and behave: the case of the UK industry
TL;DR: In this paper, the authors present a valuation method based on the assumption that policyholders' basic expectation that their saved funds shall be invested with value growth higher than inflation in the real goods market, and take this as the benchmark to assess the reported value of policyholders’ assets.
References
More filters
Journal ArticleDOI
The Cross‐Section of Expected Stock Returns
Eugene F. Fama,Kenneth R. French +1 more
TL;DR: In this paper, Bhandari et al. found that the relationship between market/3 and average return is flat, even when 3 is the only explanatory variable, and when the tests allow for variation in 3 that is unrelated to size.
Journal ArticleDOI
Financial Intermediation and Delegated Monitoring
TL;DR: In this paper, the authors developed a theory of financial intermediation based on minimizing the cost of monitoring information which is useful for resolving incentive problems between borrowers and lenders, and presented a characterization of the costs of providing incentives for delegated monitoring by a financial intermediary.
Journal ArticleDOI
Informational asymmetries, financial structure, and financial intermediation
TL;DR: This paper argued that the average quality is likely to be low, with the consequence that even projects which are known (by the entrepreneur) to merit financing cannot be undertaken because of the high cost of capital resulting from low average project quality.
Journal ArticleDOI
The Hubris Hypothesis of Corporate Takeovers
TL;DR: The hubris hypothesis is advanced as an explanation of corporate takeovers by Jensen and Ruback as mentioned in this paper, who argued that the evidence supports the hubris hypotheses as much as it supports other explanations such as taxes, synergy, and inefficient target management.
Journal ArticleDOI
Event-study methodology under conditions of event-induced variance
TL;DR: It is demonstrated that a simple adjustment to the cross-sectional techniques produces appropriate rejection rates when the null is true and equally powerful tests when it is false.