Author: Xuchao Li, Jiankun Lu, Jian Wang, Jiyuan Wang

Abstract: Using medical insurance (MI) to shift employees' health risks outside is an important risk management tool for modern firms. Existing studies usually treat firms' contributions to employees' MI only as a labor cost. However, contributing to MI also has indirect benefits, such as improved labor productivity and R&D innovation, which consequently increase corporate value. This paper studies the impact of firms' MI contributions for employees on corporate value, using social insurance collection system reform in China as a natural experiment. Results show that, first, the reform increases firms' contributions to employees' MI funds. Second, the increase has a positive impact on firms' market-to-book ratio. These effects can be explained by enhanced labor productivity, firm efficiency, and innovation. Heterogeneity analysis suggests that the effects are more pronounced for firms in high R&D industries, areas with high pollution, or areas with better medical and labor supplies.

Keywords: corporate value, employee health risks, medical insurance contribution

The article was published online in September 2023 in the "Journal of Risk and Insurance," which is a Level A- reward journal in the academic journal ranking scheme of the School of the Economics and Management School of Wuhan University. The "Journal of Risk and Insurance" is the flagship journal of the American Risk and Insurance Association and is the top-ranked journal in the global field of risk management and insurance.

Link: https://onlinelibrary.wiley.com/doi/full/10.1111/jori.12448