Separation of Ownership and Management: Implications for Risk Taking Behavior

Posted: 26 Feb 2014

See all articles by Cassandra R. Cole

Cassandra R. Cole

Florida State University - College of Business

Enya He

Independent

Kathleen A. McCullough

Florida State University - College of Business

David W. Sommer

St. Mary's University; University of Georgia - Department of Insurance, Legal Studies, Real Estate

Date Written: February 25, 2011

Abstract

Issues associated with the relation between the separation of ownership and management and risk-taking behavior have been considered in an array of studies, with varying results. Due to the wide variety of ownership structures present, the property-casualty insurance industry provides an excellent setting to test the conflicting hypotheses related to separation of ownership from management and risk taking behavior. Employing a large sample of property-liability insurance companies over the period of 1996-2004, we empirically test the alternative hypotheses regarding the implications of separation of ownership from management for firms’ risk taking behavior. The empirical tests include the ownership structures specified in prior research as well as a more detailed classification scheme. We find that each ownership structure is significantly different from every other ownership structure in terms of risk.

Suggested Citation

Cole, Cassandra R. and He, Enya and McCullough, Kathleen A. and Sommer, David W., Separation of Ownership and Management: Implications for Risk Taking Behavior (February 25, 2011). Available at SSRN: https://ssrn.com/abstract=2401221

Cassandra R. Cole (Contact Author)

Florida State University - College of Business ( email )

423 Rovetta Business Building
Tallahassee, FL 32306-1110
United States

Enya He

Independent

Kathleen A. McCullough

Florida State University - College of Business ( email )

Department of Risk Management and Insurance
150 Rovetta Business Building
Tallahassee, FL 32306-1110
United States
850-644-8358 (Phone)
850-644-4077 (Fax)

David W. Sommer

St. Mary's University ( email )

1 Camino Santa Maria
San Antonio, TX 78023
United States
210-431-8055 (Phone)

University of Georgia - Department of Insurance, Legal Studies, Real Estate ( email )

Athens, GA 30602-6254
United States
706-542-5160 (Phone)
706-542-4295 (Fax)

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