Published papers

Natural disasters, particularly in the Asia-Pacific region, are causing increasing uninsured losses, with Japan facing high seismic risks. Despite an affordable national earthquake insurance program introduced in 1966, take-up rates remain low, likely due to public underestimation of earthquake probabilities. This study investigates how subjective risk perceptions are updated after disasters, focusing on Japan’s earthquake insurance uptake following the 1995 Great Hanshin-Awaji Earthquake (Kobe earthquake). We find that the urban context of the Kobe earthquake significantly influenced insurance purchases in other major cities, such as Tokyo, despite these areas being unaffected. Population size played a greater role than urban density, and similar effects were absent in non-urban areas. Our results suggest the representativeness heuristic of “urban-ness,” rather than risk aversion. These findings highlight how heuristics can reduce the protection gap and inform policies to enhance disaster resilience.

This study examines how corporate governance affects pension plan sponsors’ conflicting motives—risk-shifting vs. risk management—and their future pension funding status, R&D investments, and shareholder values. We focus on managers’ discretionary choices of expected rates of return on plan assets and discount rates for pension liabilities to capture risk-shifting motives and measure corporate governance quality through foreign equity ownership (strong monitoring) and stable equity ownership (weak monitoring). The evidence shows that well-governed firms use managerial risk-shifting to finance R&D and increase shareholder values. Risk-shifting by poorly-governed firms results in larger pension underfunding without increasing shareholder values.

Firm managers of defined-benefit (DB) pension plan sponsors reveal their primary motives — risk-shifting or risk-management — through their assumed expected rates of return (ERRs) on the plan assets. Managers with risk-shifting motives choose high ERRs to exploit flexible internal financing from employees via pension underfunding. Those with risk-management motives choose low ERRs to reduce future cash-flow uncertainty by improving the pension funding status. We examine if ERRs predict the firms’ future cash-flow allocation between pension funding and corporate investments, in a Japanese sample that mitigates the selection bias concern for US DB plan sponsors. Using dynamic panel regressions that control for lagged dependent variables, firms’ business prospects, and unobserved fixed effects, we show that higher ERRs precede higher capital investments, R&D expenses, and net pension obligations while revealing managerial aggression, especially among firms with high external financing costs. Higher ERRs predict higher market-to-book ratios for the firms with larger R&Ds and/or underfunding, suggesting that the risk-shifting channel of internal financing with high ERRs can help alleviate underinvestment problems.

This study examines the relation between bank equity ownership and corporate hedging in Japan, an economy where banks are allowed, to a certain limit, to hold shares of firms to which they lend funds. The results show that bank equity ownership is positively related to the corporate usage of derivatives. We also find very little evidence that firm-level financial constraints affect derivatives usage. We further analyze the relation between derivatives usage and firm value to assess whether derivatives usage is driven by bank rent-seeking or speculative behavior. We find that derivatives usage is positively related to firm value providing support to the notion that bank equity ownership increases corporate hedging which, in turn, leads to high firm valuation. Robustness tests show that the relation between hedging and main bank equity ownership is not driven by endogeneity. In the end, our findings suggest that corporate hedging is driven by risk-averse incentives resulting from bank monitoring. We conclude that, in addition to relevant economic factors, ownership structure can also affect corporate hedging behavior.

This study investigates the impact of organization structure on corporate demand for reinsurance. Previous research has shown that the unique corporate groupings in Japan known as the "keiretsu" have relatively low bankruptcy costs, low agency conflicts, low information asymmetry, and low effective taxes. These conditions should mitigate the benefits of reinsurance purchase. This conjecture is tested by examining demand for reinsurance of Japanese non-life insurance companies during 1974–2010. Consistent with the prediction, keiretsu non-life insurers have lower reinsurance purchase than independent non-life insurance companies. The effects of the keiretsu structure also receded when keiretsu groupings' power was weakened after the asset bubble burst and the breakdown of the convoy system in mid 1990s. Consistent with previous studies, Japanese mutual insurers also purchase more reinsurance than stock insurers.

地震保険等，災害保険の加入率を高めプロテクションギャップを縮減することは，保険が社会的役割を果たすという観点から重要な政策課題である。大災害をめぐる人々の保険加入行動の実証的な理解は，EBPM（証拠に基づく政策立案）の出発点として重要であり，そのための有用な観察事実として，長年，研究者が注目してきたのは，大災害前後の非対称な保険需要という現象である。本稿の目的は，大災害をめぐる個人の保険需要に関する研究動向を整理することで，今後の研究の方向性を展望することにある。特に，わが国の2つの大震災—阪神淡路大震災と東日本大震災—に注目した研究（Kamiya and Yanaseó 2019）の紹介を通じて，「地震保険統計」を研究利用することの有用性についても言及する。