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The Devil Made Me Do It: The Corporate Purchase of Insurance

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  • Goldberg Victor P.

    (Columbia Law School)

Abstract

Despite the fact that public corporations ought to be risk neutral, they often carry insurance. This note first considers why insurance (or, more precisely, the package of services provided by insurance companies) might create value, regardless of the risk preferences of managers, shareholders, or other corporate stakeholders. One motive is that their contractual counterparties--buyers, lessors, and lenders--require that they carry insurance. Three explanations for why the requirement might be value enhancing are proposed

Suggested Citation

  • Goldberg Victor P., 2009. "The Devil Made Me Do It: The Corporate Purchase of Insurance," Review of Law & Economics, De Gruyter, vol. 5(1), pages 541-553, October.
    • Handle: RePEc:bpj:rlecon:v:5:y:2009:i:1:n:22
    DOI: 10.2202/1555-5879.1376
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    References listed on IDEAS

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    1. Neil A. Doherty & Clifford W. Smith, 1993. "Corporate Insurance Strategy: The Case Of British Petroleum," Journal of Applied Corporate Finance, Morgan Stanley, vol. 6(3), pages 4-15, September.
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    Cited by:

    1. Victor P. Goldberg, 2013. "Contracts: coordination across firm boundaries," Chapters, in: Anna Grandori (ed.), Handbook of Economic Organization, chapter 5, Edward Elgar Publishing.
    2. Thomas Url, 2018. "Die Folgen staatlicher Wechselbürgschaften und Beteiligungsgarantien für Inlandsbeschäftigung und Leistungsbilanz," WIFO Studies, WIFO, number 61057.
    3. Thomas Url, 2022. "Die gesamtwirtschaftliche Bedeutung der österreichischen Versicherungswirtschaft," WIFO Studies, WIFO, number 69819.
    4. Thomas Url, 2016. "Gesamtwirtschaftliche Auswirkungen der Exportgarantien in Österreich," WIFO Studies, WIFO, number 58839.

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