Consolidation and Value Creation in the Insurance Industry: The Role of Governance

45 Pages Posted: 15 Jun 2006

See all articles by Georges Dionne

Georges Dionne

HEC Montreal - Department of Finance

Narjess Boubakri

American University of Sharjah - School of Business and Management; HEC Montreal - Department of Finance

Thouraya Triki

HEC Montreal

Date Written: June 13, 2006

Abstract

We examine the long run performance of M&A transactions in the property-liability insurance industry. We specifically investigate whether such transactions create value for the bidders' shareholders and assess how corporate governance mechanisms affect such performance. Our results show that M&A create value in the long run as buy and hold abnormal returns are positive and significant after three years. While tender offers appear to be more profitable than mergers, our evidence does not support the conjecture that domestic transactions create more value than cross border transactions. Furthermore, positive returns are significantly higher for frequent acquirers and in countries where investor protection is better. Internal corporate governance mechanisms are also significant determinants of the performance of bidders.

Keywords: Merger and acquisition, property-liability insurance, governance, value creation, performance of bidders

JEL Classification: D80, G22

Suggested Citation

Dionne, Georges and Boubakri, Narjess and Triki, Thouraya, Consolidation and Value Creation in the Insurance Industry: The Role of Governance (June 13, 2006). Available at SSRN: https://ssrn.com/abstract=908660 or http://dx.doi.org/10.2139/ssrn.908660

Georges Dionne (Contact Author)

HEC Montreal - Department of Finance ( email )

3000 Chemin de la Cote-Sainte-Catherine
Montreal, Quebec H3T 2A7
Canada
514-340-6596 (Phone)
514-340-5019 (Fax)

HOME PAGE: http://www.hec.ca/gestiondesrisques/

Narjess Boubakri

American University of Sharjah - School of Business and Management ( email )

P.O. Box 26666
Sharjah
United Arab Emirates

HOME PAGE: http://www.aus.edu

HEC Montreal - Department of Finance ( email )

3000 Chemin de la Cote-Sainte-Catherine
Montreal, Quebec H3T 2A7
Canada

Thouraya Triki

HEC Montreal ( email )

3000, Chemin de la Côte-Sainte-Catherine
Montreal, Quebec H3T 2A7
Canada

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