To read this content please select one of the options below:

The corporate governance–risk-taking nexus: evidence from insurance companies

Ahmed A. Elamer (Bradford University School of Management, University of Bradford, UK and Accounting Department, Faculty of Commerce, Mansoura University, Mansoura, Egypt)
Aws AlHares (Financial Ethics and Governance Research Group, Department of Accountancy and Finance, Business School, University of Huddersfield, UK and Faculty of School of Business Studies, College of the North Atlantic in Qatar, Qatar)
Collins G. Ntim (Department of Accounting, Centre for Research in Accounting, Accountability and Governance, Southampton Business School, University of Southampton, UK)
Ismail Benyazid (Accounting Department, Faculty of Economics and Trade, Asmarya University, Libya)

International Journal of Ethics and Systems

ISSN: 2514-9369

Article publication date: 26 October 2018

Issue publication date: 5 November 2018

1145

Abstract

Purpose

This study aims to examine the impact of internal corporate governance mechanisms on insurance companies’ risk-taking in the UK context.

Design/methodology/approach

The study uses a panel data of all listed insurance companies on FTSE 350 over the 2005-2014 period. Multivariate regression techniques are used to estimate the effect of internal corporate governance mechanisms on insurance companies’ risk-taking.

Findings

The results show that the board size and board meetings are significantly and negatively related to risk-taking. In contrast, the results show that board independence and audit committee size are statistically insignificant but negatively related to risk-taking. The findings are robust to alternative measures and endogeneities.

Research limitations/implications

The findings have important implications for investors, managers, regulators of financial institutions and effectiveness of corporate governance reforms that have been pursued. Investors may further rely on internal corporate governance attributes to form expectations about risk-taking behaviour. Insurance companies need strong governance, as well as effective accounting and financial reporting standards, to enable proper insights into the company’s financial position.

Originality/value

This study contributes to the corporate governance literature and creates significant evidence regarding the role of corporate governance in constraining risk-taking behaviour in an industry with significantly complex context.

Keywords

Citation

Elamer, A.A., AlHares, A., Ntim, C.G. and Benyazid, I. (2018), "The corporate governance–risk-taking nexus: evidence from insurance companies", International Journal of Ethics and Systems, Vol. 34 No. 4, pp. 493-509. https://doi.org/10.1108/IJOES-07-2018-0103

Publisher

:

Emerald Publishing Limited

Copyright © 2018, Emerald Publishing Limited

Related articles