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CORPORATE INSURANCE STRATEGY: THE CASE OF BRITISH PETROLEUM

CORPORATE INSURANCE STRATEGY: THE CASE OF BRITISH PETROLEUM Footnotes 1 . See, for example, G. E. Rejda, Principles of Insurance (Glenview, Ill.: Scott Foresman, 1989), pp. 52–53; and C. A. Williams, Risk Management and Insurance (NewYork: McGraw Hill, 1989), Chapter 13. 2 . This discussion draws heavily on three articles by David Mayers and Clifford Smith, “On the Corporate Demand for Insurance,” Journal of Business (1982) , 281‐296; “The Corporate Insurance Decision,” Chase Financial Quarterly (Spring 1982), 47‐65; “ Corporate Insurance and the Underinvestment Problem ,” Journal of Risk and Insurance , LIV ( 1987 ), 45 – 54 . 3 . In the financial economics literature, risk aversion refers to an invidual who prefers the average outcome, or the “expected value” of a gamble, to taking a chance on the distribution of possible outcomes. Thus, a risk‐averse individual would pay to get out of a risky situation or, alternatively, would demand a higher rate of return for holding a riskier security. 4 . One of the cardinal principles of modern finance is that, on average and over long periods of time, investors both expect and receive rewards commensurate with the risks they bear. As the bulk of the academic evidence also shows, however, average resturns http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Applied Corporate Finance Wiley

CORPORATE INSURANCE STRATEGY: THE CASE OF BRITISH PETROLEUM

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References (2)

Publisher
Wiley
Copyright
Copyright © 1993 Wiley Subscription Services, Inc., A Wiley Company
ISSN
1078-1196
eISSN
1745-6622
DOI
10.1111/j.1745-6622.1993.tb00230.x
Publisher site
See Article on Publisher Site

Abstract

Footnotes 1 . See, for example, G. E. Rejda, Principles of Insurance (Glenview, Ill.: Scott Foresman, 1989), pp. 52–53; and C. A. Williams, Risk Management and Insurance (NewYork: McGraw Hill, 1989), Chapter 13. 2 . This discussion draws heavily on three articles by David Mayers and Clifford Smith, “On the Corporate Demand for Insurance,” Journal of Business (1982) , 281‐296; “The Corporate Insurance Decision,” Chase Financial Quarterly (Spring 1982), 47‐65; “ Corporate Insurance and the Underinvestment Problem ,” Journal of Risk and Insurance , LIV ( 1987 ), 45 – 54 . 3 . In the financial economics literature, risk aversion refers to an invidual who prefers the average outcome, or the “expected value” of a gamble, to taking a chance on the distribution of possible outcomes. Thus, a risk‐averse individual would pay to get out of a risky situation or, alternatively, would demand a higher rate of return for holding a riskier security. 4 . One of the cardinal principles of modern finance is that, on average and over long periods of time, investors both expect and receive rewards commensurate with the risks they bear. As the bulk of the academic evidence also shows, however, average resturns

Journal

Journal of Applied Corporate FinanceWiley

Published: Sep 1, 1993

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