12 Pages Posted: 3 Apr 2009
Date Written: February 1, 2009
Despite the fact that public corporations ought to be risk neutral, they often carry insurance. This note first considers why insurance (or, more precisely, the package of services provided by insurance companies) might create value, regardless of the risk preferences of managers, shareholders, or other corporate stakeholders. One motive is that their contractual counter parties-buyers, lessors, and lenders - require that they carry insurance. Two explanations for why the requirement might be value enhancing are proposed.
Suggested Citation: Suggested Citation
Goldberg, Victor P., The Devil Made Me Do It: The Corporate Purchase of Insurance (February 1, 2009). Columbia Law and Economics Working Paper No. 346. Available at SSRN: https://ssrn.com/abstract=1338336 or http://dx.doi.org/10.2139/ssrn.1338336