TY - JOUR
T1 - Does property rights protection affect corporate risk management strategy? Intra- and cross-country evidence
AU - LIN, Chen
AU - LIN, Ping
AU - ZOU, Hong
PY - 2012/4/1
Y1 - 2012/4/1
N2 - Recent studies in the law and finance literature have shown that property rights protection is central to corporate financing and investment decisions and economic growth at large. We extend this literature by examining the effect of property rights security on corporate risk management decisions - an important element of a firm’s business strategy. Using a unique dataset covering over 55,000 Chinese firms and employing both institution- and firm-level measures of property rights security, we find that secure property rights lead to higher corporate demand for property insurance, suggesting that property rights security is an important determinant of corporate risk management decisions. The effect of property rights protection on insurance consumption is also validated by a cross-country analysis that uses data from 93 countries over the period 1995-2008. Our study represents an initial attempt towards understanding the importance of property rights protection to corporate risk management decisions.
AB - Recent studies in the law and finance literature have shown that property rights protection is central to corporate financing and investment decisions and economic growth at large. We extend this literature by examining the effect of property rights security on corporate risk management decisions - an important element of a firm’s business strategy. Using a unique dataset covering over 55,000 Chinese firms and employing both institution- and firm-level measures of property rights security, we find that secure property rights lead to higher corporate demand for property insurance, suggesting that property rights security is an important determinant of corporate risk management decisions. The effect of property rights protection on insurance consumption is also validated by a cross-country analysis that uses data from 93 countries over the period 1995-2008. Our study represents an initial attempt towards understanding the importance of property rights protection to corporate risk management decisions.
KW - Banking
KW - Property rights protection
KW - Risk Management
UR - http://commons.ln.edu.hk/sw_master/340
U2 - 10.1016/j.jcorpfin.2011.12.006
DO - 10.1016/j.jcorpfin.2011.12.006
M3 - Journal Article (refereed)
SN - 0929-1199
VL - 18
SP - 311
EP - 330
JO - Journal of Corporate Finance
JF - Journal of Corporate Finance
IS - 2
ER -