Incentive Contracting and the Role of Participation Rights in Stock Insurers

@inproceedings{Garven1995IncentiveCA,
  title={Incentive Contracting and the Role of Participation Rights in Stock Insurers},
  author={James Robert Garven and Steven W. Pottier},
  year={1995}
}
Corporate limited liability creates incentives for owners to shift risks onto creditors by substituting high-risk assets for low-risk assets because it rewards owners with the benefits of risky activities while penalizing them with only a portion of the costs. However, since rational creditors understand these incentives, the ensuing agency cost is borne ex ante by owners, unless they can credibly precommit themselves not to shift risk onto creditors. This article considers one specific… CONTINUE READING

Figures and Tables from this paper.

References

Publications referenced by this paper.
SHOWING 1-10 OF 38 REFERENCES

Best's Insolvency Study, LifelHealth Insurers

A M.
  • Best Company,
  • 1992
VIEW 5 EXCERPTS
HIGHLY INFLUENTIAL

Financial Economics of the Insurance Firm, Ph.D. dissertation, University of Texas

ton Kluwer-Nijhoff. Pottier, W Steven
  • 1994

Financial Economics of the Insurance Firm, Ph.D. dissertation, University of Texas

ton Kluwer-Nijhoff. Pottier, W Steven
  • 1994

The Risk-Shifting Problem and Convertible Bonds

MacMinn, D Richard
  • Advances in Quantitative Analysis of Finance and
  • 1993

The Risk-Shifting Problem and Convertible Bonds

MacMinn, D Richard
  • Advances in Quantitative Analysis of Finance and
  • 1993

An Exposition of the Implications of Limited Liabili

Garven, R James
  • 1992

An Exposition of the Implications of Limited Liability and Asymmetric Taxes for Property - Liability Insurance

Garven, R James
  • Journal of Risk and Insurance
  • 1992

Similar Papers