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)Researchpeer-review

23 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 Sep 2011
Externally publishedYes

Fingerprint

Institutional ownership
Insurer
Risk taking
Insurance industry
Owners
Riskiness
Simultaneous equation system
Large shareholders
Total risk
Investors
System model
Insurance companies

Bibliographical note

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

Cite this

@article{29e8a00708834bcaa63477d21013d81a,
title = "Institutional ownership stability and risk taking : evidence from the life–health insurance industry",
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.",
author = "Jiang CHENG and Elyas ELYASIANI and JIA, {Jingyi (Jane)}",
note = "This article was presented at the ARIA meetings 2009 in Providence, Rhode Island.",
year = "2011",
month = "9",
day = "1",
doi = "10.1111/j.1539-6975.2011.01427.x",
language = "English",
volume = "78",
pages = "609--641",
journal = "Journal of Risk and Insurance",
issn = "0022-4367",
publisher = "Wiley-Blackwell Publishing Ltd",
number = "3",

}

Institutional ownership stability and risk taking : evidence from the life–health insurance industry. / CHENG, Jiang; ELYASIANI, Elyas; JIA, Jingyi (Jane).

In: Journal of Risk and Insurance, Vol. 78, No. 3, 01.09.2011, p. 609-641.

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

TY - JOUR

T1 - Institutional ownership stability and risk taking : evidence from the life–health insurance industry

AU - CHENG, Jiang

AU - ELYASIANI, Elyas

AU - JIA, Jingyi (Jane)

N1 - This article was presented at the ARIA meetings 2009 in Providence, Rhode Island.

PY - 2011/9/1

Y1 - 2011/9/1

N2 - 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.

AB - 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.

UR - http://commons.ln.edu.hk/sw_master/5902

U2 - 10.1111/j.1539-6975.2011.01427.x

DO - 10.1111/j.1539-6975.2011.01427.x

M3 - Journal Article (refereed)

VL - 78

SP - 609

EP - 641

JO - Journal of Risk and Insurance

JF - Journal of Risk and Insurance

SN - 0022-4367

IS - 3

ER -