Impact of Ownership Structure and Business Diversifications on the Risk-Taking Behaviors of Insurance Companies in Vietnam

SAGE Open - Tập 13 Số 3 - 2023
Khoa Dang Duong1, Ai Ngoc Nhan Le1,2, Diep Van Nguyen3, Hoa Thanh Phan Le4
1Faculty of Finance and Banking, Ton Duc Thang University, Ho Chi Minh City, Vietnam
2Faculty of Finance and Banking, Van Lang University, Ho Chi Minh City, Vietnam
3Faculty of Finance and Banking, Ho Chi Minh City Open University, Vietnam
4Faculty of Accounting and Auditing, Van Lang University, Vietnam

Tóm tắt

This study analyzes the impacts of ownership structure and business diversifications on the risk-taking behaviors of insurance companies in Vietnam. Foreign ownership and institutional ownership in the insurance sector are increasing significantly due to the privatization trend in Vietnam. Besides, business diversification allows insurance firms to maximize profits and reduce insolvency. Therefore, this study enriches the current literature because it is the first to examine how ownership and diversifications affect the risk-taking behaviors of insurance companies in Vietnam. We employ the Ordinary Least Squares, Fixed Effect Models, Random Effect Models, Generalized Least Squares, and dynamic system Generalized Methods of Moments to analyze 42 insurance companies from 2005 to 2020. Our findings indicate that business diversification increases the risk-taking behaviors of insurance firms. We also figure out a U-shaped relationship between institutional ownership and risk-taking behavior, with a turning point of 9.8%. This study also indicates an inverse U-shaped relationship between foreign ownership and insurers’ risk-taking behaviors, with a turning point of 20%. Thirdly, the interaction terms between ownership and diversification suggest the moderate role of business diversification in increasing the risk of insurance firms. Our findings align with agency theory, stakeholder theory, monitoring hypothesis, expropriation hypothesis, and prior literature. This study contributes practical implications for managers and policymakers to develop the insurance sector sustainably.

Từ khóa


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SAGE Open

Tập 13 Số 3

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