Does property insurance promote corporate innovation? Evidence from China

Feiyan Yang, Jiahui Ren, Junjie Yang, Yuchuan Zhang and Changyuan Xia ()
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Feiyan Yang: Southwestern University of Finance and Economics, Sichuan Province
Jiahui Ren: Southwestern University of Finance and Economics, Sichuan Province
Junjie Yang: Southwestern University of Finance and Economics, Sichuan Province
Yuchuan Zhang: Central University of Finance and Economics
Changyuan Xia: Southwestern University of Finance and Economics, Sichuan Province

The Geneva Papers on Risk and Insurance - Issues and Practice, 2025, vol. 50, issue 1, No 3, 34-77

Abstract: Abstract This paper investigates the impact of property insurance on corporate innovation. Using data from Chinese listed firms between 2010 and 2021, we find that property insurance can reduce the uncertainty arising from negative cash flows and then promote corporate innovation. This finding holds true when controlling endogeneity and performing robustness checks. The mechanism tests suggest that the positive impact of property insurance use on corporate innovation is primarily attributed to the enhancement of companies’ risk-taking and the alleviation of financing constraints. Additionally, the effects of property insurance use are stronger for non-state-owned companies, high- and new-technology enterprises, and firms led by more innovative managers. Overall, this study highlights the role of property insurance in enhancing corporate incentives for innovation.

Keywords: Property insurance; Corporate innovation; Risk-taking; Financing constraints (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1057/s41288-024-00343-y

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