Why did shareholder liability disappear?

David A. Bogle, Gareth Campbell, Christopher Coyle, John D. Turner*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

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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.

Original languageEnglish
Article number103761
Number of pages15
JournalJournal of Financial Economics
Early online date05 Dec 2023
Publication statusPublished - Feb 2024


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