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Tuesday, August 3 • 10:45am - 12:15pm
4D3 CEO political orientation, risk-taking and firm performance: Evidence from the US property-liability insurance industry

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Kwangmin Jung, POSTECH (Pohang University of Science and Technology); Sangyong Han, Korea Insurance Research Institute

We examine how CEOs’ political orientation can affect risk-taking behavior and performance of U.S. property-liability insurance companies. Using information on political donations by CEOs to measure their political identity, we document a strong relationship between CEOs’ political conservatism and risk-averse behavior in insurers’ decision-making. We find that the more Republican partisan CEO (or more politically conservative) is, the less risks a property-liability insurer tends to take in the capital market and underwriting business. We also provide evidence on firm performance that insurers managed by Republican-oriented CEOs are more likely to achieve better financial profitability. The overall findings lead to the conclusion that property-liability insurers with politically conservative CEOs tend to have lower variability in their asset investments and underwriting business, but are more likely to achieve their corporate value to satisfy their shareholders and policyholders.


Tao Sun

Lingnan University


Sangyong Han

Korea Insurance Research Institute

Kwangmin Jung

POSTECH (Pohang University of Science and Technology)

Tuesday August 3, 2021 10:45am - 12:15pm EDT