| dc.description.abstract | I study corporate risk management with property insurance in non-listed small and
medium sized rms. I document negative relations between various ownership measures
CEO salary, ownership concentration and aggregate female ownership and insurance
use as well as a positive relation between the number of family owners and insurance use.
These relations are consistent with self-insurance among CEO-controlled rms, rms with
high ownership concentrations, rms with above average female owners and rms with a
small number of family owners, given monopolistic insurance premium pricing practices. Indeed,
I show that insurance premium and rm protability are positively related, implying
that insurers raise premium when rm protability soars or implying that protable rms
demand more coverage and other provisions. The above relations are also consistent with
stakeholders stipulating less insurance the higher the CEO salary or the higher the ownership
concentration, precisely because these rm characteristics proxy inversely for rm risk. This
view is supported by negative relations between these ownership variables and the coe-
cient of variation of revenues. Further, I provide evidence of strong causal relations between
insurance use, leverage and liquidity. Specically, insurance use and liquidity are risk management
complements since insurance use exerts a positive inuence on corporate liquidity
and liquidity exerts a positive inuence on insurance use. Finally, ownership concentration
and aggregate female ownership show positive relations with liquidity which is consistent
with risk aversion motivated hedges. | en |
