Intangible Assets and Firm Asset Risk Taking: An Analysis of Property and Liability Insurance Firms

35 Pages Posted: 23 Apr 2008

See all articles by Tong Yu

Tong Yu

University of Cincinnati - Department of Finance - Real Estate

Bing-Xuan Lin

University of Rhode Island

Henry R. Oppenheimer

University of Rhode Island - Area of Finance and Insurance

Xuanjuan Chen

Shanghai University of Finance and Economics

Date Written: September 2007

Abstract

Intangible assets facilitate insurers' capacity to retain existing business and attract new clients. In this study we analyze how the incentives to protect intangible assets affect asset risk taking behavior of property liability insurers. Our evidence supports the view that insurers' incentives to protect their intangible assets lead to an inverse relation between intangible assets and asset risk. Consistent with the view that highly levered firm may go for broke, asset risk of highly levered insurers is less elastic to intangible assets than that of lowly levered insurers. Another interesting finding is that tangible factors such as firm size and capitalization increase insurers' appetite for asset risk taking.

Keywords: intangible assets, franchise value, gambling, asset allocation, insurance

Suggested Citation

Yu, Tong and Lin, Bing-Xuan and Oppenheimer, Henry R. and Chen, Xuanjuan, Intangible Assets and Firm Asset Risk Taking: An Analysis of Property and Liability Insurance Firms (September 2007). Available at SSRN: https://ssrn.com/abstract=1122878 or http://dx.doi.org/10.2139/ssrn.1122878

Tong Yu (Contact Author)

University of Cincinnati - Department of Finance - Real Estate ( email )

College of Business Administration
Cincinnati, OH 45221
United States
4019548606 (Phone)
4019548606 (Fax)

Bing-Xuan Lin

University of Rhode Island ( email )

7 Lippitt Rd
Kingston, RI 02881
United States
401-874-4895 (Phone)
401-874-4312 (Fax)

Henry R. Oppenheimer

University of Rhode Island - Area of Finance and Insurance ( email )

Callentine Hall
7 Lippitt Road
Kingston, RI 02881-0802
United States

Xuanjuan Chen

Shanghai University of Finance and Economics ( email )

777 Guoding Road
Shanghai, AK Shanghai 200433
China

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