IDEAS home Printed from
   My bibliography  Save this article

Dividend Signaling by Insurance Companies and Price Regulation: A Reexamination


  • Maosen Zhong


I reexamine Akhigbe, Borde, and Madura’s (1993) study of dividend signaling by insurers and provide an alternative interpretation from a price-regulation perspective. Using a more appropriate data classification system, I partition 161 insurance companies into three categories: life, property-liability, and multi-line. All three types of insurers experience significant abnormal returns during the dividend increase events. The property-liability insurers’ returns are less volatile during the event window period. This implies that investors of property-liability insurers are more confident in the content of dividend signals, perhaps because the price regulators bear part of investors’ monitoring costs. On the other hand, limited information due to price regulation urges investors of property-liability insurers to respond faster than do investors of life insurers. A cross-sectional analysis suggests that property-liability insurers experience large stock price response to dividend signaling. Since price regulation limits information regarding insurers’ performance conveyed through insurance premiums, dividend increases potentially convey more asymmetric information in property-liability insurers.

Suggested Citation

  • Maosen Zhong, 1999. "Dividend Signaling by Insurance Companies and Price Regulation: A Reexamination," Journal of Insurance Issues, Western Risk and Insurance Association, vol. 22(2), pages 164-176.
  • Handle: RePEc:wri:journl:v:22:y:1999:i:2:p:164-176

    Download full text from publisher

    File URL:
    Download Restriction: no

    More about this item


    Access and download statistics


    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:wri:journl:v:22:y:1999:i:2:p:164-176. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (James Barrese). General contact details of provider: .

    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.

    We have no references for this item. You can help adding them by using 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.