The U.S. Property and Liability Insurance Industry: Firm Growth, Size, and Age

18 Pages Posted: 9 Apr 2012

See all articles by Byeongyong Paul Choi

Byeongyong Paul Choi

Howard University - School of Business - Department of Finance, International Business, and Insurance

Date Written: Fall 2010

Abstract

The relationship between firm size, age, and growth is tested for the U.S. property and liability (P‐L) insurance industry, and the determinants of firm characteristics on firm growth are analyzed. Using Heckman's two‐stage methodology, this article examines the relationship between corporate growth and firm size. The relationship between firm growth and firm age is also investigated. Furthermore, to determine time‐varying effects, the analysis is conducted for the different subperiods. The results of this article strongly support Gibrat's Law in the U.S. P‐L insurance market for the testing periods. The results are consistent for longer time periods and for shorter subperiods. It also finds that young firms grow faster than old firms during the sample periods. Related to the determinants of firm characteristics on firm growth, insurers using less input cost tend to grow fast. Economies of scope are positively related to firm growth as well.

Suggested Citation

Choi, Byeongyong Paul, The U.S. Property and Liability Insurance Industry: Firm Growth, Size, and Age (Fall 2010). Risk Management and Insurance Review, Vol. 13, Issue 2, pp. 207-224, 2010. Available at SSRN: https://ssrn.com/abstract=2036900 or http://dx.doi.org/10.1111/j.1540-6296.2010.01181.x

Byeongyong Paul Choi (Contact Author)

Howard University - School of Business - Department of Finance, International Business, and Insurance ( email )

2600 Sixth St. NW
Washington, DC 20059
United States

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