TY - JOUR
T1 - The strategic use of corporate insurance in China
AU - Jia, Joy Yihui
AU - Adams, Mike
AU - Buckle, Mike
PY - 2011/3
Y1 - 2011/3
N2 - We use the agency theory to conduct a novel test of the strategic use of property insurance in China's corporate sector. With regard to our main test hypotheses, we find that the incidence of property insurance purchased is directly related to the degree of product–market competitiveness, and positively related to market liquidity and firms’ growth opportunities. However, the homogeneity of market operations is not statistically significant. In our second-stage Cragg regression, market liquidity becomes insignificant while firms’ growth opportunities are now inversely related to the amount of insurance purchased. Additionally, the homogeneity of market operations becomes significantly related to the corporate purchase of property insurance. Therefore, different factors (e.g. cost considerations) may influence the decisions to purchase property insurance and subsequently, the level of coverage provided. We argue that our results are relevant for companies in other emerging markets such as Eastern Europe and companies operating in more developed Western economies such as the European Union (EU).
AB - We use the agency theory to conduct a novel test of the strategic use of property insurance in China's corporate sector. With regard to our main test hypotheses, we find that the incidence of property insurance purchased is directly related to the degree of product–market competitiveness, and positively related to market liquidity and firms’ growth opportunities. However, the homogeneity of market operations is not statistically significant. In our second-stage Cragg regression, market liquidity becomes insignificant while firms’ growth opportunities are now inversely related to the amount of insurance purchased. Additionally, the homogeneity of market operations becomes significantly related to the corporate purchase of property insurance. Therefore, different factors (e.g. cost considerations) may influence the decisions to purchase property insurance and subsequently, the level of coverage provided. We argue that our results are relevant for companies in other emerging markets such as Eastern Europe and companies operating in more developed Western economies such as the European Union (EU).
UR - http://www.scopus.com/inward/record.url?scp=79961038729&partnerID=8YFLogxK
UR - http://dx.doi.org/10.1080/1351847X.2011.554281
U2 - 10.1080/1351847X.2011.554281
DO - 10.1080/1351847X.2011.554281
M3 - Article
SN - 1351-847X
VL - 17
SP - 675
EP - 694
JO - The European Journal of Finance
JF - The European Journal of Finance
IS - 8
ER -