Why firms purchase property insurance

• 成果类型: Article
• 署名作者: Aunon-Nerin, Daniel; Ehling, Paul
• 署名单位: BI Norwegian Business School
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2008.01.003
• 发表日期: 2008
• 页码: 298-312
• 关键词: Corporate risk management; Property insurance

摘要

We investigate whether corporate finance incentives affect the extent of corporate hedging with property insurance. Using a database that contains detailed insurance information, we document a positive relation between the expected costs of distress and property insurance coverage. We also show that the dividend payout ratio is negatively associated with property insurance coverage, consistent with the view that firms with high payout ratios insure a smaller fraction of properties due to cash flows in excess of investment needs, easy access to capital markets, or both. Different incentives are important for the insurance deductible and limit of coverage, and the deductible and limit of coverage are substitutes. (C) 2008 Elsevier B.V. All rights reserved.