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The U.S. Property and Liability Insurance Industry: Firm Growth, Size, and Age

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  • Byeongyong Paul Choi

Abstract

The relationship between firm size, age, and growth is tested for the U.S. property and liability (P‐L) insurance industry, and the determinants of firm characteristics on firm growth are analyzed. Using Heckman's two‐stage methodology, this article examines the relationship between corporate growth and firm size. The relationship between firm growth and firm age is also investigated. Furthermore, to determine time‐varying effects, the analysis is conducted for the different subperiods. The results of this article strongly support Gibrat's Law in the U.S. P‐L insurance market for the testing periods. The results are consistent for longer time periods and for shorter subperiods. It also finds that young firms grow faster than old firms during the sample periods. Related to the determinants of firm characteristics on firm growth, insurers using less input cost tend to grow fast. Economies of scope are positively related to firm growth as well.

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  • Byeongyong Paul Choi, 2010. "The U.S. Property and Liability Insurance Industry: Firm Growth, Size, and Age," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 13(2), pages 207-224, September.
    • Handle: RePEc:bla:rmgtin:v:13:y:2010:i:2:p:207-224
    DOI: j.1540-6296.2010.01181.x
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    1. LIU Yang, 2018. "Firm Age, Size, and Employment Dynamics: Evidence from Japanese firms," Discussion papers 18006, Research Institute of Economy, Trade and Industry (RIETI).
    2. Chia‐Chun Chiang, 2020. "Does Having an Affiliated Bank Improve Life Insurer Performance in a Turbulent Market?," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 87(3), pages 627-664, September.
    3. Chen-Ying Lee, 2014. "The Effects of Firm Specific Factors and Macroeconomics on Profitability of Property-Liability Insurance Industry in Taiwan," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 4(5), pages 681-691, May.
    4. Murmann Johann Peter & Korn Jenny & Worch Hagen, 2014. "How Fast Can Firms Grow?," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 234(2-3), pages 210-233, April.

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