ORGANIZATION STRUCTURE AND CORPORATE DEMAND FOR REINSURANCE: THE CASE OF THE JAPANESE KEIRETSU

Noriyoshi Yanase, Piman Limpaphayom

Research output: Contribution to journalArticle

5 Citations (Scopus)

Abstract

This study investigates the impact of organization structure on corporate demand for reinsurance. Previous research has shown that the unique corporate groupings in Japan known as the “keiretsu” have relatively low bankruptcy costs, low agency conflicts, low information asymmetry, and low effective taxes. These conditions should mitigate the benefits of reinsurance purchase. This conjecture is tested by examining demand for reinsurance of Japanese non-life insurance companies during 1974–2010. Consistent with the prediction, keiretsu non-life insurers have lower reinsurance purchase than independent non-life insurance companies. The effects of the keiretsu structure also receded when keiretsu groupings' power was weakened after the asset bubble burst and the breakdown of the convoy system in mid 1990s. Consistent with previous studies, Japanese mutual insurers also purchase more reinsurance than stock insurers.

Original languageEnglish
Pages (from-to)599-629
Number of pages31
JournalJournal of Risk and Insurance
Volume84
Issue number2
DOIs
Publication statusPublished - 2017 Jun 1
Externally publishedYes

Fingerprint

Organization structure
Keiretsu
Reinsurance
Insurer
Purchase
Non-life insurance
Grouping
Insurance companies
Bankruptcy costs
Tax
Asset bubbles
Information asymmetry
Breakdown
Agency conflict
Japan
Prediction

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

Cite this

ORGANIZATION STRUCTURE AND CORPORATE DEMAND FOR REINSURANCE : THE CASE OF THE JAPANESE KEIRETSU. / Yanase, Noriyoshi; Limpaphayom, Piman.

In: Journal of Risk and Insurance, Vol. 84, No. 2, 01.06.2017, p. 599-629.

Research output: Contribution to journalArticle

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