Institutional ownership stability and risk taking : evidence from the life–health insurance industry

Jiang CHENG, Elyas ELYASIANI, Jingyi (Jane) JIA

Research output: Journal PublicationsJournal Article (refereed)peer-review

36 Citations (Scopus)

Abstract

We investigate the relationship between risk taking of life–health (LH) insurers and stability of their institutional ownership within a simultaneous equation system model. Three main results are obtained. First, stable institutional ownership of is associated with lower total risk of LH insurers, supporting the prudent-man law hypothesis. Second, when investors are sorted in terms of stringency of the prudent-man restrictions, their negative effect on risk holds for all, except insurance companies, as owners of LH insurers. Third, large institutional owners do not raise the riskiness of the investee-firms, as proposed by the large shareholder hypothesis. Regulatory implications are drawn.
Original languageEnglish
Pages (from-to)609-641
Number of pages33
JournalJournal of Risk and Insurance
Volume78
Issue number3
DOIs
Publication statusPublished - 1 Sept 2011
Externally publishedYes

Bibliographical note

This article was presented at the ARIA meetings 2009 in Providence, Rhode Island.

Cite this