Why did shareholder liability disappear?

David A. Bogle, Gareth Campbell, Christopher Coyle and John Turner ()

Journal of Financial Economics, 2024, vol. 152, issue C

Abstract: Why did shareholder liability disappear? We address this question by looking at its use by British insurance companies until its complete disappearance. We explore three possible explanations for its demise: (1) regulation and government-provided policyholder protection meant that it was no longer required; (2) it had become de facto limited; and (3) shareholders saw an opportunity to expunge something they disliked when insurance companies grew in size. Using hand-collected archival data, our findings suggest investors attached a risk premium to companies with shareholder liability, and it was phased out as insurance companies expanded, which meant that they were better able to pool risks.

Keywords: Insurance; Regulation; Shareholder liability; United Kingdom (search for similar items in EconPapers)
JEL-codes: G11 G22 N20 N40 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:152:y:2024:i:c:s0304405x23002015

DOI: 10.1016/j.jfineco.2023.103761

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