The effect of predation risk on cash holdings: Empirical evidence from the U.S. property‐liability insurance industry

Autor:	Xin Che, Stephen G. Fier, Andre P. Liebenberg
Rok vydání:	2019
Předmět:	Economics and Econometrics 050208 finance media_common.quotation_subject 05 social sciences Monetary economics Liability insurance Market concentration 01 natural sciences Predation 010104 statistics & probability Empirical research Accounting Cash Capital (economics) Cash holdings 0502 economics and business Business 0101 mathematics Empirical evidence Finance media_common
Zdroj:	Risk Management and Insurance Review. 22:329-358
ISSN:	1540-6296 1098-1616
DOI:	10.1111/rmir.12131
Popis:	Corporate cash holdings play a significant role in the U.S. property‐liability insurance industry yet the topic of insurer cash holdings policy has largely been overlooked by prior empirical research. While a number of studies have investigated firm‐specific factors related to cash holdings in the insurance industry, prior research has not examined how market concentration and potential predation risk impact cash holdings. We propose a new measure of market concentration and provide evidence in support of the predation risk theory. Specifically, we show that insurers exposed to more concentrated markets tend to hold more cash. Furthermore, the relation between market concentration and cash holdings is influenced by access to internal capital. While unaffiliated insurers without access to internal capital hold greater levels of cash in more concentrated markets, group insurers with access to internal capital do not hold greater levels of cash to mitigate predation risk.
Databáze:	OpenAIRE
Externí odkaz:	https://explore.openaire.eu/search/publication?articleId=doi_________::a6d54a4115c46e5ed164cf3952815111 https://doi.org/10.1111/rmir.12131 Zobrazit plný text záznamu Plný text ve formátu PDF Plný text ve formátu HTML
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