The Effect Of Corporate Property Insurance On The Firm Performance

Since the domestic insurance industry was recovered in China in 1979,the domestic corporate property insurance market began to develop gradually.In the past 30 years,with the development of Chinese economy,both the life insurance industry and property insurance industry got through rapid promotion in China.However,the corporate property insurance market got in trouble.In order to explore the reason why this abnormal phenomenon appeared,this paper conducts an empirical study on how corporate property insurance influences the value of firms.This paper starts from the phenomenon that China's corporate property insurance market grew at quite slow speed.Then we raise a question that purchasing corporate property insurance does have effect on value of firms.After that,we deeply show theories of corporate property insurance and firm value and summery recent literatures on relationship between these two concepts.We explain why corporate property insurance can theoretically increase firm value.What's more,a mathematical model is also used to support the theoretical explanations.An empirical test was conducted with a sample composed by Chinese listed nonfinancial companies.We establish regression model with variables concerning on those companies' insurance behaviors and financial performance.We use ROA and ROE as the variables on behalf of firm value in a mixed effect model.And then we collect the firms' property insurance purchasing data and financial data of sample companies.The result shows that purchasing corporate property insurance has a significantly positive effect on ROA while no effect on ROE.Finally,we give some suggestions on adjustment of our own corporate property insurance products and relating researches,hoping to healthily promote the development of domestic corporate property insurance industry.There are two innovations in this paper.On one hand,this paper is the first to use panel data to study relationship between corporate property insurance and firm value.It does not only help to complete the literature system but also give companies realistic reference about the value of corporate property insurance.On the other hand,compared with current literatures whose sample generally comes from specified industries,this paper firstly set all nonfinancial listed companies as research sample.These two innovations finally made this paper a supplement to corporate risk management literature system,closely combine theoretical researches and empirical tests and providecompanies realistic reference to how management influences firm value.