Prior literature provides support both for the existence of target capital structures and internal capital markets (ICM). The issue of whether firms use internal capital to reduce deviations from target capital structures, however, has yet to be examined. We provide the first empirical evidence...

Issues associated with the relation between the separation of ownership and management and risk-taking behavior have been considered in an array of studies, with varying results. Due to the wide variety of ownership structures present, the property-casualty insurance industry provides an...

Empirical evidence suggests that insurance groups allocate capital to members with better performance or growth prospects and use internal capital markets to protect franchise value of less capitalized members. We propose and test an additional motivation for the use of internal capital markets...

Adverse selection plays a prominent role in the insurance literature due to its negative implications for insurer financial performance and stability. However, there is a paucity of empirical evidence consistent with the existence of adverse selection in the U.S. insurance market. Potential...