IDEAS home Printed from https://ideas.repec.org/a/wri/journl/v18y1995i1p37-56.html
   My bibliography  Save this article

Demutualizations and Free Cash Flows

Author

Listed:
  • C. Steven Cole
  • Michael J. McNamara
  • Brenda P. Wells

Abstract

This article examines undistributed cash flow before and after life insurance company demutualizations. Theory argues that free cash flow should be lower on a relative basis under the stock form of organization as the incentives, control, and bond opportunities are greater than under the mutual form of organization. The empirical results show a significant reduction in relative and undistributed cash flow after life insurers convert from the mutual to the stock form of organization. The evidence supports the contention that stock insurers are more effective in reducing the agency costs of equity than are mutual insurers.

Suggested Citation

  • C. Steven Cole & Michael J. McNamara & Brenda P. Wells, 1995. "Demutualizations and Free Cash Flows," Journal of Insurance Issues, Western Risk and Insurance Association, vol. 18(1), pages 37-56.
    • Handle: RePEc:wri:journl:v:18:y:1995:i:1:p:37-56
    as

    Download full text from publisher

    File URL: http://www.insuranceissues.org/PDFs/X.pdf
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wise William, 2020. "The Importance of the Efficiency of Mutual Life Insurers: A Comparison to Stock Life Insurers," Folia Oeconomica Stetinensia, Sciendo, vol. 20(1), pages 474-505, June.
    2. Qiming Wang & James A. Ligon, 2009. "The Underpricing of Insurance IPOs," Financial Management, Financial Management Association International, vol. 38(2), pages 301-322, June.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wri:journl:v:18:y:1995:i:1:p:37-56. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: James Barrese (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.