The Wealth Effect of Demutualization: Evidence from the U.S. Property-Liability and Life Insurance Industries

Gene C. Lai, Michael J. McNamara, Tong Yu
{"title":"The Wealth Effect of Demutualization: Evidence from the U.S. Property-Liability and Life Insurance Industries","authors":"Gene C. Lai, Michael J. McNamara, Tong Yu","doi":"10.1111/j.1539-6975.2007.00251.x","DOIUrl":null,"url":null,"abstract":"This study examines the wealth effect of demutualization initial public offerings (IPOs) by investigating underpricing and postconversion long-run stock performance. Our results suggest that there is more \"money left on the table\" for demutualized insurers than for non-demutualized insurers. We show that higher underpricing for demutualized firms can be explained by greater market demand, market sentiment, and the size of the offering. Further, contrary to previous research reporting an average underperformance of industrial IPOs, we show that demutualization IPOs outperform non-IPO firms with comparable size and book-to-market ratios and non-demutualized insurers. We present evidence that the outperformance in stock returns is mainly attributable to improvement in post-demutualization operating performance and demand at the time of the IPOs. The combined results of underpricing and long-term performance suggest that the wealth of policyholders who choose stock rather than cash or policy credits is not harmed by demutualization. Stockholders who purchase demutualized company shares either during or after the IPO have earned superior returns. Our findings are consistent with the efficiency improvement hypothesis. Copyright The Journal of Risk and Insurance, 2008.","PeriodicalId":170505,"journal":{"name":"Macroeconomics eJournal","volume":"208 1","pages":"0"},"PeriodicalIF":0.0000,"publicationDate":"2008-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"21","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Macroeconomics eJournal","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1111/j.1539-6975.2007.00251.x","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"","JCRName":"","Score":null,"Total":0}
引用次数: 21

Abstract

This study examines the wealth effect of demutualization initial public offerings (IPOs) by investigating underpricing and postconversion long-run stock performance. Our results suggest that there is more "money left on the table" for demutualized insurers than for non-demutualized insurers. We show that higher underpricing for demutualized firms can be explained by greater market demand, market sentiment, and the size of the offering. Further, contrary to previous research reporting an average underperformance of industrial IPOs, we show that demutualization IPOs outperform non-IPO firms with comparable size and book-to-market ratios and non-demutualized insurers. We present evidence that the outperformance in stock returns is mainly attributable to improvement in post-demutualization operating performance and demand at the time of the IPOs. The combined results of underpricing and long-term performance suggest that the wealth of policyholders who choose stock rather than cash or policy credits is not harmed by demutualization. Stockholders who purchase demutualized company shares either during or after the IPO have earned superior returns. Our findings are consistent with the efficiency improvement hypothesis. Copyright The Journal of Risk and Insurance, 2008.
非股份化的财富效应:来自美国财产、责任和人寿保险行业的证据
本研究通过调查定价过低和转换后的长期股票表现来检验非股份化首次公开发行(ipo)的财富效应。我们的研究结果表明,非股份化保险公司比非股份化保险公司有更多的“钱留在桌子上”。我们表明,非股份化公司较高的低定价可以用更大的市场需求、市场情绪和发行规模来解释。此外,与之前报告工业ipo平均表现不佳的研究相反,我们表明,股份化ipo的表现优于具有可比规模和账面市值比的非ipo公司和非股份化保险公司。我们提供的证据表明,股票收益的优异表现主要归因于股份化后经营业绩的改善和ipo时需求的改善。定价过低和长期表现的综合结果表明,选择股票而不是现金或保单信贷的保单持有人的财富不会受到股份化的损害。在首次公开募股期间或之后购买非股份化公司股票的股东获得了丰厚的回报。我们的发现与效率提高假说一致。版权所有的风险与保险杂志,2008。
本文章由计算机程序翻译,如有差异,请以英文原文为准。
求助全文
约1分钟内获得全文 求助全文
来源期刊
自引率
0.00%
发文量
0
×
引用
GB/T 7714-2015
复制
MLA
复制
APA
复制
导出至
BibTeX EndNote RefMan NoteFirst NoteExpress
×
提示
您的信息不完整,为了账户安全,请先补充。
现在去补充
×
提示
您因"违规操作"
具体请查看互助需知
我知道了
×
提示
确定
请完成安全验证×
copy
已复制链接
快去分享给好友吧!
我知道了
右上角分享
点击右上角分享
0
联系我们:info@booksci.cn Book学术提供免费学术资源搜索服务,方便国内外学者检索中英文文献。致力于提供最便捷和优质的服务体验。 Copyright © 2023 布克学术 All rights reserved.
京ICP备2023020795号-1
ghs 京公网安备 11010802042870号
Book学术文献互助
Book学术文献互助群
群 号:481959085
Book学术官方微信