Weekly Departmental Seminar- Environmental Economics and Management
Speaker: Christian Kubitza
Affiliation: University of Bonn
Subject: "Do Investors Matter? Tracing Corporate Finance and Investment to Insurance Markets"
Bio: Christian Kubitza is a postdoctoral researcher in the Finance Group of the University of Bonn's Department of Economics. His research focuses on financial intermediation, insurance, corporate finance, and financial stability.
Abstract: This paper documents that shocks in household insurance markets propagate to the real economy through insurance companies' bond investments. Liquidity windfalls from household insurance purchases raise insurers' demand for corporate bonds. Exploiting that insurers tend to invest in the same set of firms over time, I show that the increase in bond demand boosts bond prices and lowers firms’ funding costs. As a response, firms opportunistically increase bond issuance and use the proceeds to raise real investment rather than equity payouts. These results matter for understanding investors’ impact on corporate finance and investment.