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Capital Structure of Non-life Insurance Firms in Japan

Author

Listed:
  • Mahito Okura
  • Satoru Yamaguchi

Abstract

This research investigates the debt to equity ratio (D/E ratio) in non-life insurance firms in Japan through empirical analysis and offers several main findings. First, the solvency margin ratio has a negative effect on the D/E ratio. Second, neither the Return on Equity (ROE) nor the combined ratio has an impact on the D/E ratio. Third, the expense ratio has a positive effect on the D/E ratio, while the loss ratio does not. The second and third results imply that the expense ratio is the most suitable index for measuring profitability in Japan¡¯s non-life insurance firms when the D/E ratio is being considered.

Suggested Citation

  • Mahito Okura & Satoru Yamaguchi, 2016. "Capital Structure of Non-life Insurance Firms in Japan," Applied Economics and Finance, Redfame publishing, vol. 3(3), pages 45-49, August.
    • Handle: RePEc:rfa:aefjnl:v:3:y:2016:i:3:p:45-49
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    References listed on IDEAS

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    1. Lin, Leming & Flannery, Mark J., 2013. "Do personal taxes affect capital structure? Evidence from the 2003 tax cut," Journal of Financial Economics, Elsevier, vol. 109(2), pages 549-565.
    2. Eugene F. Fama, 2002. "Testing Trade-Off and Pecking Order Predictions About Dividends and Debt," The Review of Financial Studies, Society for Financial Studies, vol. 15(1), pages 1-33, March.
    3. Jean Tirole, 2006. "The Theory of Corporate Finance," Post-Print hal-00173191, HAL.
    4. Malcolm Baker & Jeffrey Wurgler, 2002. "Market Timing and Capital Structure," Journal of Finance, American Finance Association, vol. 57(1), pages 1-32, February.
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    Cited by:

    1. Daniel Tawiah Pabifio, 2024. "Sensitivity Analysis of Ruin of an Insurance Company in Ghana," Papers 2410.11846, arXiv.org.

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    More about this item

    Keywords

    capital structure; debt to equity ratio; non-life insurance; Japan;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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