Proceedings of 9th International Business and Social Science Research Conference
6 - 8 January, 2014, Novotel World Trade Centre, Dubai, UAE, ISBN: 978-1-922069-41-2
Capital Structure and Corporate form of Ownership: An
Investigation of the Us Life Insurance Industry
Hassan A. Said*
This paper empirically investigates organizational form of
corporate ownership and capital structure of the U.S. life
insurance industry and contributes to the current debate of
financial policy differences between stock and mutual life
insurers. The ownership factor is expected to have implications
for different capital structure, underwriting, and investment
policies. Other influential factors are expected to impact policies
differences. Accordingly, a set of testable hypotheses is
developed to examine policies differences between the two
insurers. Controlling these other influential factors, the
corporate ownership form is found to be significant in two policy
areas: capital structure and investment. The empirical results
yield support to the following conclusions. First, mutual life
insurers maintain significantly higher financial leverage than
stock insurers. Second, the proportion of investment in the
asset categories of bonds, mortgage loans, and policy loans are
higher for mutuals. No systematic differences are found in the
underwriting policy.
JEL Codes: G32, G22, and M41
*Dr. Hassan A. Said, Department of Accounting, Finance and Economics, Austin Peay State
University, USA. Email : saidh@apsu.edu