scholarly journals Corporate Diversification, Ownership, and Solvency in China’s Property-Liability Insurance Companies

2021 ◽  
Vol 2021 ◽  
pp. 1-9
Author(s):  
Shuang Wu ◽  
Xilian Deng
Keyword(s):  
Two Dimensions ◽  
Product Diversification ◽  
Liability Insurance ◽  
Insurance Companies ◽  
Corporate Diversification ◽  
Geographic Diversification ◽  
Diversification Strategy ◽  
Geographical Expansion ◽  
Premium Income ◽  
The Impact

Solvency is the premise of the sustainable management of insurance companies. Among factors that affect the solvency of insurance companies, diversification strategy is one that cannot be ignored. To study the impact of diversification on the solvency of property-liability insurance companies and how diversification will influence companies with different ownership, this paper adopts the dynamic panel GMM model and the unbalanced panel data from 2009 to 2015. The analysis is from two dimensions: product diversification and geographic diversification. Empirical study shows that product diversification will increase the solvency of Chinese-funded property-liability insurance companies but reduce the solvency of foreign-funded ones. As for the impact of geographic diversification on solvency, the more geographically diversified the premium income of Chinese-funded property-liability insurance companies are, the lower their solvency will be. However, geographical expansion has no significant solvency-related impact on foreign-funded property-liability insurance companies in China.

scholarly journals The Impact of Corporate Diversification and Financial Structure on Firm Performance: Evidence from South Asian Countries

2019 ◽  
Vol 12 (1) ◽  
pp. 49 ◽  
Author(s):  
Rashid Mehmood ◽  
Ahmed Hunjra ◽  
Muhammad Chani
Keyword(s):  
Financial Performance ◽  
South Asian ◽  
Financial Structure ◽  
Manufacturing Firms ◽  
Product Diversification ◽  
Corporate Diversification ◽  
Asian Countries ◽  
Geographic Diversification ◽  
Dynamic Panel ◽  
The Impact

We examined the impact of corporate diversification and financial structure on the firms’ financial performance. We collected data from 520 manufacturing firms from Pakistan, India, Sri Lanka, and Bangladesh. We used panel data of 14 years from 2004–2017 to analyze the results. We applied a two-step dynamic panel approach to analyze the hypotheses. We found that product diversification and geographic diversification significantly affected the firms’ financial performance. We further found that dividend policy and capital structure had a significant impact on the firm’s financial performance.

Corporate or Product Diversification

2017 ◽  
Author(s):  
Margarethe F. Wiersema ◽  
Joseph B. Beck
Keyword(s):  
Distribution Channels ◽  
Shareholder Wealth ◽  
Product Diversification ◽  
Strategic Decision ◽  
Business Trend ◽  
Corporate Diversification ◽  
Diversification Strategy ◽  
Unrelated Diversification ◽  
Strategic Assets ◽  
Related Diversification

Corporate or product diversification represents a strategic decision. Specifically, it addresses the strategic question regarding in which businesses the firm will compete. A single-business company that expands its strategic scope by adding new businesses becomes a diversified, multibusiness company. The means by which a company expands its strategic scope is by acquiring businesses, investing in the development of new businesses, or both. Similarly, an already diversified firm can reduce its strategic scope by divesting from or closing businesses. There are two fundamentally different types of corporate diversification strategy, depending on the interrelatedness of the businesses in the company’s portfolio: related diversification and unrelated diversification. Related diversification occurs when the businesses in the company’s portfolio share strategic assets or resources, such as technology, a brand name, or distribution channels. Unrelated diversification occurs when a company’s businesses do not share strategic assets or resources and do not have interrelationships of strategic importance. Companies can pursue both types of diversification simultaneously, and thus have a portfolio of businesses both related and unrelated. In addition to variations in the type of diversification, companies can vary in the extent of their diversification, ranging from business portfolios with very limited diversification to highly diversified portfolios. Decisions regarding the diversification strategy of a firm represent major strategic scope decisions since they impact the markets and industries in which the company will compete. Companies can increase or reduce their level of diversification for a variety of reasons. Economic motives, for example, include the pursuit of economies of multiproduct scale and scope, whereby per-unit costs may be lowered through the increase in sales volume or other fixed-cost reducing benefits associated with growth through diversification. In addition, companies may diversify for strategic reasons, such as enhancement of capabilities or superior competitive positioning through entry into new product markets. Similarly, economic and strategic reasons can motivate the firm to refocus and reduce its level of diversification when the strategic and economic rationales for being in a particular business are no longer justified. The performance consequences of corporate diversification can vary, depending on both the extent of the firm’s diversification and the type of diversification. In general, research indicates that high levels of diversification are value-destroying due to the integrative and complexity-associated costs that administering an extremely diversified portfolio imposes on management. Nevertheless, related diversification, where the company shares underlying resources across its business portfolio (e.g., brand, technology, and distribution channels), can lead to higher levels of performance than can unrelated diversification, due to the potential for enhanced profitability from leveraging shared resources. Corporate diversification was a major U.S. business trend in the 1960s. During the 1980s, however, pressure from the capital market for shareholder wealth maximization led to the adoption of strategies whereby many companies refocused their business portfolios and thus reduced their levels of corporate diversification by divesting unrelated businesses in order to concentrate on their predominant or core business.

Diversification, family involvement and firm performance

2016 ◽  
Vol 35 (5) ◽  
pp. 663-680 ◽  
Author(s):  
Emanuela Delbufalo ◽  
Sara Poggesi ◽  
Simone Borra
Keyword(s):  
Firm Performance ◽  
Family Involvement ◽  
Fixed Effects ◽  
Product Diversification ◽  
Geographic Diversification ◽  
Content Type ◽  
The Status ◽  
The Impact ◽  
Italian Manufacturing Firms ◽  
Moderating Role

Purpose – The purpose of this paper is to investigate the effect of product and geographic diversification on the performance of Italian manufacturing firms and evaluate the moderating role of family involvement. Design/methodology/approach – The hypotheses have been tested by using a fixed-effects panel data regression model. Findings – Results show a linear relationship between product diversification and firm performance and an inverted U-shaped relationship between geographic diversification and firm performance. Moreover, when considering the status of the family firm, family ties have a negative moderating role on the performance of companies that are product and internationally diversified. Originality/value – By providing theoretical explanations and empirical evidence, the study extends the diversification-performance research by testing this relationship in an unexplored context (i.e. Italy), and by identifying a still not well explored contingency factor (i.e. family involvement). In doing so, diversification and family involvement literatures are brought together and the results show the importance of the type of owner regarding the impact of product and international diversification on firm performance.

scholarly journals The impact of lending on bancassurance activity

2019 ◽  
Vol 13 (1) ◽  
pp. 171-181
Author(s):  
Elda Marzai Abliz
Keyword(s):  
Negative Impact ◽  
Distribution Channel ◽  
Solvency Ii ◽  
Capital Requirements ◽  
Financial Supervision ◽  
Insurance Companies ◽  
Insurance Company ◽  
Customer Base ◽  
Premium Income ◽  
The Impact

Abstract Due to financial crisis, and especially because of prudence in lending (retail, micro, and corporate), banks are looking for new sources of income, and bancasurance is clearly a potential source of revenue. Thus, in the financial market, the interests of two major components of it are met: banks maximize commission income, and insurers make access to the large customer base of banks. Bancassurance is a distribution channel of insurance products through bank branches, bringing important advantages for banks, insurance companies and customers. The main advantage for the bank is that earns fee amount from the insurance company, the insurance company increases customers data base and market share, the client satisfy his financial needs and requests in the same institution. Considering that in Romania, banks and insurers do not provide information on the number of insurances sold via the bancassurance distribution channel, as well as commissions obtained by banks for the insurance sale, to determine the development of bancassurance in Romania, we used the statistical data provided by the National Bank of Romania, on credit growth and data provided by The Financial Supervision Association, on the evolution of gross written premiums. Bancassurance is one of the most important insurance distribution channels, accounting for approximately 36% of the global insurance market, in 2016, Europe’s insurers generated total premium income of €1 189bn and had €10 112bn invested in the economy. Regarding to the risks of bancassurance business for banks and insurers, they mainly concern distinct capital requirements for the banking and insurance systems, which will be covered by the Basel III and Solvency II directives. This paper aims to analyze the influence of credit on the bancassurance activity in the last 5 years in Romania, the economic, political and legal factors that have a negative impact on the development of bancassurance, and also the calculating the correlation coefficient r (Pearson’s coefficient) and his result.

scholarly journals The Impact of Directors’ and Officers’ Liability Insurance on Corporate Performance: An Empirical Evidence from the Data of Chinese Listed Financial Enterprises

2020 ◽  
Vol 7 (1) ◽  
pp. 35-45
Author(s):  
Zhe Sun
Keyword(s):  
Significant Positive Correlation ◽  
Corporate Performance ◽  
Liability Insurance ◽  
Insurance Companies ◽  
Significant Positive Effect ◽  
Factors Affecting ◽  
Directors And Officers ◽  
The Impact ◽  
The Relationship ◽  
Positive Effect

 Based on data of the listed banks and insurance companies from 2011-2016, this paper studies the factors affecting directors’ and officers’ liability insurance, the relationship between directors’ and officers’ liability insurance and corporate performance. Empirical research shows that there is a significant positive correlation between the company’s asset-liability ratio, corporate performance and directors’ and officers’ liability insurance. Directors’ and officers’ liability insurance has a significant positive effect on corporate performance of listed banks and insurance companies. The empirical findings of this paper will help to strengthen the understanding of directors’ and officers’ liability insurance in bank and insurance companies and promote the widespread use of directors’ and officers’ liability insurance in the future.

scholarly journals The Influence of Liberalization on Innovation, Performance, and Competition Level of Insurance Industry in Indonesia

2020 ◽  
Vol 12 (24) ◽  
pp. 10620
Author(s):  
Tulus Suryanto ◽  
Darul Dimasqy ◽  
Reza Ronaldo ◽  
Mahjus Ekananda ◽  
Teuku Heru Dinata ◽  
...  
Keyword(s):  
Negative Impact ◽  
Insurance Industry ◽  
Negative Relationship ◽  
Innovation Performance ◽  
Insurance Companies ◽  
Threshold Regression ◽  
Aggregate Model ◽  
The Government ◽  
Premium Income ◽  
The Impact

This study aims to reveal the impact of liberalization on innovation, performance, and the level of competition for insurance industry players in Indonesia based on insurance data from 2006 to 2018. The research method used is quantitative with the support of panel data. The analysis technique to explain the findings uses an aggregate model and Threshold Regression analysis. Descriptive and econometric research types were chosen to make it easier to explain the findings. From the results of data analysis using three experimental models, it shows three findings. First, in the aggregate, there is a significant negative relationship between liberalization and innovation. In the Threshold Regression model, a negative impact occurs on companies with low premium income, whereas in high premium income companies, the result is positive. This is due to the availability of resources to large companies to optimize the adaptation of liberalization in terms of innovation. Second, higher liberalization can encourage insurance companies to perform more efficiently and increase net premium income. Third, the negative impact of liberalization on competition shows that the higher the deregulation, the lower the game. These findings indicate that in the aggregate, global insurance financial liberalization has had a significant impact on the development of the insurance industry sector in Indonesia. However, liberalization can be different for groups of small companies and groups of large companies. The expected implication is that the government needs to adopt a long-term policy strategy that can encourage the sustainability of insurance companies: both high-income companies and low-premium-income companies. Besides this, it is hoped that insurance companies pay more attention to innovation, significantly improving the quality of human resources as a competitive advantage in facing global competition.

scholarly journals Ownership structure and corporate diversification decision: a study of Vietnamese listed firms

2016 ◽  
Vol 13 (3) ◽  
pp. 226-233 ◽  
Author(s):  
Duc Nam Phung ◽  
Thi Bich Nguyet Phan ◽  
Thi Lien Hoa Nguyen ◽  
Thi Phuong Vy Le
Keyword(s):  
Ownership Structure ◽  
Negative Impact ◽  
Positive Impact ◽  
Emerging Market ◽  
Foreign Ownership ◽  
State Ownership ◽  
Corporate Diversification ◽  
Diversification Strategy ◽  
Listed Firms ◽  
The Impact

This research examines the impact of the ownership structure on corporate diversification decision of listed firms in Vietnam over the period of 2007 and 2012. The empirical results from logit model show that while state ownership has positive impact on corporate diversification decisions of the firms, foreign ownership has negative impact on corporate diversification decision of the firms. This implies that government ownership tends to encourage corporate diversification strategy, while foreign ownership may plays monitoring role and discourage corporate diversification strategy in emerging market context.

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