Financial expositions of corporate determinants for conventional insurance: Evidence from Malaysian firms

Mohamad Abdul Hamid

    Research output: Contribution to journalArticle

    2 Citations (Scopus)

    Abstract

    Insurance industry in Malaysia continued to register positive growth in 2005, buoyed by stronger growth in the general insurance sector. In addition, over 50 percent of total premiums were from the business corporation in Malaysia. Factors like underinvestment and leverage, growth opportunities, expected bankruptcy costs, tax considerations, managerial ownership, company size and regulatory environment have been examined in this study to identify the determinants of corporate demand for conventional insurance in Malaysia. The data covers a five-year period of year 2002 - 2006 from the main board of public listed companies at Bursa Malaysia. Two models of panel data estimation were employed, namely fixed and random effects. The findings are robust to alternative specifications of the fixed effects model that help us to control for unobservable heterogeneity. The findings show that leverage, expected bankruptcy costs, tax considerations, company size, and managerial ownership play an important role in determining the corporate demand for insurance in Malaysia. This study gives some important implications for various groups like the insurers the shareholders and creditors as well as the regulators in reflecting with the financial exposition factors that determine the corporate demand for conventional insurance in Malaysia.

    Original languageEnglish
    Pages (from-to)79-92
    Number of pages14
    JournalInternational Research Journal of Finance and Economics
    Volume43
    Publication statusPublished - 2010

    Fingerprint

    Insurance
    Malaysia
    demand for insurance
    Managerial ownership
    Factors
    Bankruptcy costs
    Tax
    Company size
    Leverage
    Growth opportunities
    Fixed effects model
    Fixed effects
    Shareholders
    Premium
    Insurance industry
    Panel data estimation
    Regulatory environment
    Listed companies
    Random effects
    Underinvestment

    Keywords

    • Conventional insurance
    • Corporate demand
    • Panel data estimation

    ASJC Scopus subject areas

    • Economics and Econometrics
    • Finance

    Cite this

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