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Article
Does property rights protection affect corporate risk management strategy? Intra- and cross-country evidence
Journal of Corporate Finance
  • Chen LIN, Chinese University of Hong Kong, Hong Kong
  • Ping LIN, Lingnan University
  • Hong ZOU, City University of Hong Kong, Hong Kong
Document Type
Journal article
Publication Date
4-1-2012
Keywords
  • Property rights protection,
  • Banking,
  • Risk Management
Abstract
Recent studies in the law and finance literature have shown that property rights protection is central to corporate financing and investment decisions and economic growth at large. We extend this literature by examining the effect of property rights security on corporate risk management decisions - an important element of a firm’s business strategy. Using a unique dataset covering over 55,000 Chinese firms and employing both institution- and firm-level measures of property rights security, we find that secure property rights lead to higher corporate demand for property insurance, suggesting that property rights security is an important determinant of corporate risk management decisions. The effect of property rights protection on insurance consumption is also validated by a cross-country analysis that uses data from 93 countries over the period 1995-2008. Our study represents an initial attempt towards understanding the importance of property rights protection to corporate risk management decisions.
DOI
10.1016/j.jcorpfin.2011.12.006
E-ISSN
18726313
Publisher Statement

Copyright © 2011 Elsevier B.V.

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Citation Information
Lin, C., & Zou, H. (2012). Does property rights protection affect corporate risk management strategy? Intra- and cross-country evidence. Journal of Corporate Finance, 18(2), 311-330. doi: 10.1016/j.jcorpfin.2011.12.006