Capital Market Development,Competition, Property Rights,and the Value of Insurer Product‐Line Diversification: A Cross‐Country Analysis |
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| Authors: | Thomas R. Berry‐Stölzle Robert E. Hoyt Sabine Wende |
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| Affiliation: | Thomas R. Berry‐St?lzle and Robert E. Hoyt are at the Terry College of Business, University of Georgia. Sabine Wende is at the Faculty of Management, Economics and Social Sciences, University of Cologne. The authors can be contacted via e‐mail: trbs@terry.uga.edu, rhoyt@terry.uga.edu, and sabine.wende@uni‐koeln.de, respectively. |
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| Abstract: | In this article, we show that the effect of product diversification on performance is not homogeneous across countries. Diversified insurance companies perform significantly worse than their focused competitors in countries with well‐developed capital markets, high levels of property rights protection, and high levels of competition. In addition, we find that the diversification–performance relationship for insurance companies depends on company size. For large insurers operating in countries with less developed capital markets, diversification significantly increases performance. Our results suggest that the optimal organizational structure may be different for insurers operating in emerging economies than for insurers operating in developed countries. |
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