IDEAS home Printed from https://ideas.repec.org/a/eee/ijrema/v26y2009i4p276-283.html
   My bibliography  Save this article

Organic growth and shareholder value: A case study of the insurance industry

Author

Listed:
  • Kling, Gerhard
  • Ghobadian, Abby
  • O'Regan, Nicholas

Abstract

This paper examines organic growth and its impact on shareholder value creation. At a conceptual level, organic and external growth are readily defined; yet, at a practical level, decomposing revenue growth into its constituent elements presents methodological challenges. We develop a method to decompose revenue growth into organic growth, external growth, exchange rate effects, and under- or outperformance. Using extensive data from three insurance companies, AXA, Generali and ING, we analyzed the period from 1995 to 2005. Exchange rate effects were of minor importance, unless companies entered markets at inopportune times. Primarily, the findings indicate that only organic revenue growth enhanced shareholder value. Therefore, managers should focus on marketing as a key driver of organic growth to create value.

Suggested Citation

  • Kling, Gerhard & Ghobadian, Abby & O'Regan, Nicholas, 2009. "Organic growth and shareholder value: A case study of the insurance industry," International Journal of Research in Marketing, Elsevier, vol. 26(4), pages 276-283.
    • Handle: RePEc:eee:ijrema:v:26:y:2009:i:4:p:276-283
    DOI: 10.1016/j.ijresmar.2009.08.002
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0167811609000640
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ijresmar.2009.08.002?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Shleifer, Andrei & Vishny, Robert W., 2003. "Stock market driven acquisitions," Journal of Financial Economics, Elsevier, vol. 70(3), pages 295-311, December.
    2. Shleifer, Andrei & Vishny, Robert W, 1988. "Value Maximization and the Acquisition Process," Journal of Economic Perspectives, American Economic Association, vol. 2(1), pages 7-20, Winter.
    3. Paul André & Maher Kooli & Jean-François L’Her, 2004. "The Long-Run Performance of Mergers and Acquisitions: Evidence from the Canadian Stock Market," Financial Management, Financial Management Association, vol. 33(4), Winter.
    4. Barber, Brad M. & Lyon, John D., 1997. "Detecting long-run abnormal stock returns: The empirical power and specification of test statistics," Journal of Financial Economics, Elsevier, vol. 43(3), pages 341-372, March.
    5. Fama, Eugene F & French, Kenneth R, 1996. "Multifactor Explanations of Asset Pricing Anomalies," Journal of Finance, American Finance Association, vol. 51(1), pages 55-84, March.
    6. Carhart, Mark M, 1997. "On Persistence in Mutual Fund Performance," Journal of Finance, American Finance Association, vol. 52(1), pages 57-82, March.
    7. Christian Dunis & Til Klein, 2005. "Analysing mergers and acquisitions in European financial services: An application of real options," The European Journal of Finance, Taylor & Francis Journals, vol. 11(4), pages 339-355.
    8. Gregor Andrade & Mark Mitchell & Erik Stafford, 2001. "New Evidence and Perspectives on Mergers," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 103-120, Spring.
    9. Chen, Nai-Fu & Roll, Richard & Ross, Stephen A, 1986. "Economic Forces and the Stock Market," The Journal of Business, University of Chicago Press, vol. 59(3), pages 383-403, July.
    10. Onn, Keet Peng & Mercer, Alan, 1998. "The direct marketing of insurance," European Journal of Operational Research, Elsevier, vol. 109(3), pages 541-549, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Petrescu, Maria & O’Leary, Kathleen & Goldring, Deborah & Ben Mrad, Selima, 2018. "Incentivized reviews: Promising the moon for a few stars," Journal of Retailing and Consumer Services, Elsevier, vol. 41(C), pages 288-295.
    2. Thorbjørnsen, Helge & Dahlén, Micael, 2011. "Customer reactions to acquirer-dominant mergers and acquisitions," International Journal of Research in Marketing, Elsevier, vol. 28(4), pages 332-341.
    3. Edward Jones & Hao Li & Oluwagbenga Adamolekun, 2022. "Excess Cash Holdings, Stock Returns, and Investment Organicity: Evidence from UK Investment Announcements," Abacus, Accounting Foundation, University of Sydney, vol. 58(4), pages 603-647, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gerhard Kling & Utz Weitzel, 2010. "Endogenous mergers: bidder momentum and market reaction," Applied Financial Economics, Taylor & Francis Journals, vol. 20(3), pages 243-254.
    2. Sean Cleary & Ashrafee Hossain, 2020. "POSTCRISIS M&As AND THE IMPACT OF FINANCIAL CONSTRAINTS," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 43(2), pages 407-454, May.
    3. Martynova, M. & Renneboog, L.D.R., 2005. "Takeover Waves : Triggers, Performance and Motives," Discussion Paper 2005-029, Tilburg University, Tilburg Law and Economic Center.
    4. Jensen-Vinstrup, Mathias & Rigamonti, Damiana & Wulff, Jesper, 2018. "European cross-border acquisitions: Long-run stock returns and firm characteristics," Journal of Multinational Financial Management, Elsevier, vol. 47, pages 31-45.
    5. Ming Dong & David Hirshleifer & Scott Richardson & Siew Hong Teoh, 2006. "Does Investor Misvaluation Drive the Takeover Market?," Journal of Finance, American Finance Association, vol. 61(2), pages 725-762, April.
    6. Martynova, M., 2006. "The market for corporate control and corporate governance regulation in Europe," Other publications TiSEM 8651e281-4914-41f2-ac14-1, Tilburg University, School of Economics and Management.
    7. Bruyland, Evy & Lasfer, Meziane & De Maeseneire, Wouter & Song, Wei, 2019. "The performance of acquisitions by high default risk bidders," Journal of Banking & Finance, Elsevier, vol. 101(C), pages 37-58.
    8. Mager, Ferdinand & Meyer-Fackler, Martin, 2017. "Mergers and acquisitions in Germany: 1981–2010," Global Finance Journal, Elsevier, vol. 34(C), pages 32-42.
    9. Lee, Sangwon & Yerramilli, Vijay, 2022. "Reference prices, relative values, and the timing of M&A announcements," Journal of Corporate Finance, Elsevier, vol. 76(C).
    10. John H. Cochrane, 1999. "New facts in finance," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 23(Q III), pages 36-58.
    11. Zura Kakushadze, 2014. "4-Factor Model for Overnight Returns," Papers 1410.5513, arXiv.org, revised Jun 2015.
    12. Brav, Alon & Geczy, Christopher & Gompers, Paul A., 2000. "Is the abnormal return following equity issuances anomalous?," Journal of Financial Economics, Elsevier, vol. 56(2), pages 209-249, May.
    13. Farruggio, Christian & Michalak, Tobias C. & Uhde, Andre, 2013. "The light and dark side of TARP," Journal of Banking & Finance, Elsevier, vol. 37(7), pages 2586-2604.
    14. Lindaas, Knut F. & Simlai, Prodosh, 2014. "The value premium, aggregate risk innovations, and average stock returns," Finance Research Letters, Elsevier, vol. 11(3), pages 303-317.
    15. Louis K. C. Chan & Stephen G. Dimmock & Josef Lakonishok, 2009. "Benchmarking Money Manager Performance: Issues and Evidence," The Review of Financial Studies, Society for Financial Studies, vol. 22(11), pages 4553-4599, November.
    16. Eckbo, B. Espen & Norli, Oyvind, 2005. "Liquidity risk, leverage and long-run IPO returns," Journal of Corporate Finance, Elsevier, vol. 11(1-2), pages 1-35, March.
    17. Kiplan Womack, 2012. "Real Estate Mergers: Corporate Control & Shareholder Wealth," The Journal of Real Estate Finance and Economics, Springer, vol. 44(4), pages 446-471, May.
    18. Fernando Rubio, 2005. "Estrategias Cuantitativas De Valor Y Retornos Por Accion De Largo," Finance 0503029, University Library of Munich, Germany.
    19. Lars Hornuf & Gül Yüksel, 2022. "The Performance of Socially Responsible Investments: A Meta-Analysis," CESifo Working Paper Series 9724, CESifo.
    20. Clarke, Charles, 2022. "The level, slope, and curve factor model for stocks," Journal of Financial Economics, Elsevier, vol. 143(1), pages 159-187.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ijrema:v:26:y:2009:i:4:p:276-283. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.journals.elsevier.com/international-journal-of-research-in-marketing/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.