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Article: Hedging Affecting Firm Value via Financing and Investment: Evidence from Property Insurance Use
Title | Hedging Affecting Firm Value via Financing and Investment: Evidence from Property Insurance Use |
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Authors | |
Issue Date | 2010 |
Publisher | Wiley-Blackwell Publishing, Inc.. The Journal's web site is located at http://www.wiley.com/bw/journal.asp?ref=0046-3892 |
Citation | Financial Management, 2010, v. 39 n. 3, p. 965-996 How to Cite? |
Abstract | I provide evidence about the value effects of alternative risk management by examining corporate purchase of property insurance, a commonly used pure hedge of asset-loss risks. Using an insurance data set from China, I find that there is an inverted U-shape effect of the extent of property insurance use on firm value measured by several versions of Tobin's Q. Therefore, the use of property insurance, to a certain degree, has a positive effect on firm value; however, over insurance appears detrimental to firm value. Given that the inflection points occur at relatively high levels of the observed insurance spending, insurance use appears beneficial to the majority of my sample firms. The estimated average hedging premium is about 1.5%. I demonstrate that an avenue for insurance to create value in China is that it helps firms secure valuable new debt financing and enhance investment. © 2010 Financial Management Association International. |
Persistent Identifier | http://hdl.handle.net/10722/188464 |
ISSN | 2023 Impact Factor: 2.9 2023 SCImago Journal Rankings: 2.131 |
SSRN | |
ISI Accession Number ID | |
References |
DC Field | Value | Language |
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dc.contributor.author | Zou, H | en_US |
dc.date.accessioned | 2013-09-03T04:07:44Z | - |
dc.date.available | 2013-09-03T04:07:44Z | - |
dc.date.issued | 2010 | en_US |
dc.identifier.citation | Financial Management, 2010, v. 39 n. 3, p. 965-996 | en_US |
dc.identifier.issn | 0046-3892 | en_US |
dc.identifier.uri | http://hdl.handle.net/10722/188464 | - |
dc.description.abstract | I provide evidence about the value effects of alternative risk management by examining corporate purchase of property insurance, a commonly used pure hedge of asset-loss risks. Using an insurance data set from China, I find that there is an inverted U-shape effect of the extent of property insurance use on firm value measured by several versions of Tobin's Q. Therefore, the use of property insurance, to a certain degree, has a positive effect on firm value; however, over insurance appears detrimental to firm value. Given that the inflection points occur at relatively high levels of the observed insurance spending, insurance use appears beneficial to the majority of my sample firms. The estimated average hedging premium is about 1.5%. I demonstrate that an avenue for insurance to create value in China is that it helps firms secure valuable new debt financing and enhance investment. © 2010 Financial Management Association International. | en_US |
dc.language | eng | en_US |
dc.publisher | Wiley-Blackwell Publishing, Inc.. The Journal's web site is located at http://www.wiley.com/bw/journal.asp?ref=0046-3892 | en_US |
dc.relation.ispartof | Financial Management | en_US |
dc.rights | This is the accepted version of the following article: [Financial Management, 2010, v. 39 n. 3, p. 965-996], which has been published in final form at [http://dx.doi.org/10.1111/j.1755-053X.2010.01101.x]. In addition, authors may also transmit, print and share copies with colleagues, provided that there is no systematic distribution of the submitted version, e.g. posting on a listserve, network or automated delivery. | - |
dc.title | Hedging Affecting Firm Value via Financing and Investment: Evidence from Property Insurance Use | en_US |
dc.type | Article | en_US |
dc.identifier.email | Zou, H: hongzou@hku.hk | en_US |
dc.identifier.authority | Zou, H=rp01800 | en_US |
dc.description.nature | postprint | en_US |
dc.identifier.doi | 10.1111/j.1755-053X.2010.01101.x | en_US |
dc.identifier.scopus | eid_2-s2.0-78649479369 | en_US |
dc.relation.references | http://www.scopus.com/mlt/select.url?eid=2-s2.0-78649479369&selection=ref&src=s&origin=recordpage | en_US |
dc.identifier.volume | 39 | en_US |
dc.identifier.issue | 3 | en_US |
dc.identifier.spage | 965 | en_US |
dc.identifier.epage | 996 | en_US |
dc.identifier.isi | WOS:000281897800004 | - |
dc.publisher.place | United States | en_US |
dc.identifier.ssrn | 1652156 | - |
dc.identifier.scopusauthorid | Zou, H=48663306300 | en_US |
dc.identifier.issnl | 0046-3892 | - |