Corporate governance and performance in the UK insurance industry pre, during and post the global financial crisis
International Journal of Accounting & Information Management
ISSN: 1834-7649
Article publication date: 21 September 2022
Issue publication date: 30 September 2022
Abstract
Purpose
Due to stakeholders’ concerns on the contribution of corporate governance in monitoring insurance companies during financial crisis, this study aims to investigate whether and how various corporate governance practices would have affected firm performance of listed and non-listed insurance firms in the UK during financial crisis.
Design/methodology/approach
This study uses a unique manually collected data set from listed and non-listed insurance firms in the UK and applies different regressions models to test the hypotheses and to address the endogeneity problem.
Findings
The findings show that board non-duality and the presence of a majority shareholder improve firm performance in insurance companies. Furthermore, the findings for the sub-samples indicate a stronger positive association between board of directors and firm performance in listed insurance companies after the financial crisis, while a positive impact has been found between large shareholders and external audit firms in non-listed insurance companies before and during the crisis.
Practical implications
The results offer important practical implications for the government, management, shareholders and policymakers. For example, regulators and policymakers should benefit from these results to revise the recommendations for corporate governance mechanisms that prove to be effective on firm performance, as well as those mechanisms that have different or unexpected effects among listed or non-listed firms and/or during the turbulent periods. Investors should be aware of those specific corporate governance mechanisms that would have higher effect on performance of UK insurance firms in which they are considering to invest in.
Originality/value
This study contributes to the current literature by exploring the effect of corporate governance on financial performance by comparing between listed and non-listed insurance companies during financial crisis. Further, to the best of the authors’ knowledge, this is the first study to use two new insurance-related performance measures, the revenue growth ratio and the adjusted combined ratio, as performance proxies to explore whether these new variables create any insights.
Keywords
Acknowledgements
This paper is a slightly revised version of Chapter 2 of a PhD thesis entitled: “Corporate Governance, Firm Performance and Efficiency: Three empirical Analyses of the UK Insurance Industry” by the first author of the paper (Tony Abdoush) submitted to the Southampton Business School, Southampton University. Tony would like to thank the supervisory team (Professor Simon Wolfe and Dr Alasdair Marshal) and the examiners for their valuable comments. The authors of the current paper confirm that there is no copyright issue associated with their work.
Citation
Abdoush, T., Hussainey, K. and Albitar, K. (2022), "Corporate governance and performance in the UK insurance industry pre, during and post the global financial crisis", International Journal of Accounting & Information Management, Vol. 30 No. 5, pp. 617-640. https://doi.org/10.1108/IJAIM-03-2022-0049
Publisher
:Emerald Publishing Limited
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