This study examines the relationship between corporate social responsibility and financial performance by analyzing the intra-industry wealth impact of additions and deletions to the Domini Social 400 index. Results from the event study analysis indicate that additions to the index generate a positive share price response for the announcement firm and a negative response by rival firms. The opposite reaction is observed for index deletions. Additionally, the share price response is more pronounced for informationally opaque industries. Our study highlights the importance of external monitoring agencies in providing meaningful information that helps resolve investor uncertainty regarding the quality of a firm's relationships with its primary stakeholders.
The choice of financial structure is appropriately viewed as a complex. multidimensional decision by insurer management. Specific attention is given to traditional theories regarding capital structure, including the tradeoff between the tax benefits and increasing probability of incurring the cost of financial distress associated with leverage, and the tradeoff between protecting franchise or charter value and expropriating value through increasing exposure to interest rate risk. Within this framework, the relation between leverage, interest rate sensitivity and firm value is investigated in the property-liability insurance industry. Equity value, as gauged by Tobin's q, is determined to be related to an insurer's choice of financial structure. It is shown that the market value of equity at first grows but then later declines as leverage increases. Interest rate risk has the opposite effect. Equity value first declines with interest rate risk. but then rises at high levels of interest rate risk. These results are consistent with the prediction that financial institutions will expend scarce resources to control risk in order to protect franchise value and may indeed be signaling the existence of these valuable intangibles via these actions.
Microinsurance institutions and instruments have developed rapidly over the last decade, with policies covering tens of millions at the base of the economic pyramid. Ranging from simple policies providing life or health insurance to complex policies covering catastrophic risks for small landholders, it is a market with proven potential that demands closer attention. This paper provides a review of the nascent academic literature and then suggests some critical elements of insurance theory that may help us understand the challenges facing microinsurance markets and how these markets can better serve the needs of their customers. Although the basic theory is well known, application to microinsurance markets reveals interesting variations on known results. 411 J. Dev. Entrepreneurship 2011.16:411-440. Downloaded from www.worldscientific.com by INDIANA UNIVERSITY @ BLOOMINGTON on 03/16/15. For personal use only. Insurance Theory and Challenges Facing the Development of Microinsurance Markets 413 J. Dev. Entrepreneurship 2011.16:411-440. Downloaded from www.worldscientific.com by INDIANA UNIVERSITY @ BLOOMINGTON on 03/16/15. For personal use only.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.