Does board independence matter for corporate insurance hedging?

Reference:

Zou, H., Adams, M. and Xiao, J. Z., 2012. Does board independence matter for corporate insurance hedging? The Journal Of Financial Research, 35 (3), pp. 451-469.

Related documents:

Official URL:

http://dx.doi.org/10.1111/jfir.2012.35.issue-3

Abstract

We test the effect of board independence on corporate purchases of property insurance. We find that board independence increases the incidence of property insurance use but does not have a significant effect on the extent of property insurance use given that a firm decides to insure its assets. These findings are consistent with the argument that: (1) more independent boards view it necessary to have property insurance to manage asset-loss risks and (2) excessive insurance or insurance purchases induced by managerial risk aversion and/or self-interest does not benefit shareholders and so may not be supported by independent boards

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