Abstract

Despite the fact that public corporations ought to be risk neutral, they often carry insurance. This note first considers why insurance (or, more precisely, the package of services provided by insurance companies) might create value, regardless of the risk preferences of managers, shareholders, or other corporate stakeholders. One motive is that their contractual counterparties—buyers, lessors, and lenders—require that they carry insurance. Three explanations for why the requirement might be value enhancing are proposed

Submitted: March 5, 2009 · Accepted: May 28, 2009 · Published: October 2, 2009

Recommended Citation

Goldberg, Victor P. (2009) "The Devil Made Me Do It: The Corporate Purchase of Insurance," Review of Law & Economics: Vol. 5 : Iss. 1, Article 22.
DOI: 10.2202/1555-5879.1376
Available at: http://www.bepress.com/rle/vol5/iss1/art22