Risk management with cash and insurance in non-listed firms

I study corporate risk management with property insurance in non-listed small and medium sized rms. I document negative relations between various ownership measures CEO salary, ownership concentration and aggregate female ownership and insurance use as well as a positive relation between the number of family owners and insurance use. These relations are consistent with self-insurance among CEO-controlled rms, rms with high ownership concentrations, rms with above average female owners and rms with a small number of family owners, given monopolistic insurance premium pricing practices. Indeed, I show that insurance premium and rm protability are positively related, implying that insurers raise premium when rm protability soars or implying that protable rms demand more coverage and other provisions. The above relations are also consistent with stakeholders stipulating less insurance the higher the CEO salary or the higher the ownership concentration, precisely because these rm characteristics proxy inversely for rm risk. This view is supported by negative relations between these ownership variables and the coe- cient of variation of revenues. Further, I provide evidence of strong causal relations between insurance use, leverage and liquidity. Specically, insurance use and liquidity are risk management complements since insurance use exerts a positive inuence on corporate liquidity and liquidity exerts a positive inuence on insurance use. Finally, ownership concentration and aggregate female ownership show positive relations with liquidity which is consistent with risk aversion motivated hedges