Reputational Signals and Capital Acquisition When Insurance Companies Go Public
| Autor: | Mark L. Power, Richard B. Carter |
|---|---|
| Rok vydání: | 2012 |
| Předmět: |
Finance
Economics and Econometrics business.industry Transparency (market) media_common.quotation_subject Reputational risk General Business Management and Accounting Investment banking Accounting Economics Auto insurance risk selection business Initial public offering Risk management Underwriting Reputation media_common |
| Zdroj: | The Geneva Papers on Risk and Insurance - Issues and Practice. 37:485-508 |
| ISSN: | 1468-0440 1018-5895 |
| DOI: | 10.1057/gpp.2012.26 |
| Popis: | We analyse reputational signals and decisions surrounding capital acquisition by examining 76 insurance firms going public from 1996 to 2006. We first explore the relationship between proxies for insurance firm reputation and initial public offering (IPO) underwriter reputation. In general, we find that more reputable underwriters market IPOs of more reputable insurers—insurers that are less risky, more likely to be life insurers and that have higher franchise value. These results suggest that underwriter and insurer reputations are aligned and send consistent signals. Second, we show that the market requires a higher return from riskier/less reputable insurers when they go public. When we compare the performance of our insurance company sample to a matched sample of non-insurance firms, we find that the greater reputational transparency of insurers allows the market to do a better job of determining future performance. Last, we conclude by showing empirically that franchise value and the reputational posture of the insurance firms are positively related. These results contribute to the growing body of knowledge on reputational risk management and should enhance capital acquisition strategies of insurance company managers. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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