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Article: Board Characteristics and Profit Efficiency in the United Kingdom Life Insurance Industry

TitleBoard Characteristics and Profit Efficiency in the United Kingdom Life Insurance Industry
Authors
KeywordsCorporate Governance
Life Insurance
Profit Efficiency
United Kingdom
Issue Date2011
PublisherBlackwell Publishing Ltd. The Journal's web site is located at http://www.blackwellpublishing.com/journals/JBFA
Citation
Journal Of Business Finance And Accounting, 2011, v. 38 n. 7-8, p. 987-1015 How to Cite?
AbstractThis paper examines the effects of corporate governance mechanisms (measured by a set of board characteristics) on the profit efficiency of United Kingdom (UK) life insurance firms. A parametric 'stochastic frontier' approach is used to compute profit efficiency scores and second-stage regression models are estimated to test the influence of governance mechanisms on these efficiencies. We find that, viewed in isolation, board characteristics tend to have little effect on firm efficiency in the UK life insurance market. However, we do find that the proportion of non-executive directors on the board exhibits a significant effect on the profit efficiency of our sample UK insurers once the interaction effects among governance mechanisms are taken into account. The effect can be either positive or negative depending on whether there is separation of the CEO and board chairman positions and whether there is an audit committee. These results suggest that corporate governance is an inherently complex process and it is problematical to evaluate the effectiveness of an individual governance mechanism on a firm's economic performance. Insurers' profit efficiency is also negatively related to risk proxies and exhibits a concave relation with firm size. © 2011 Blackwell Publishing Ltd.
Persistent Identifierhttp://hdl.handle.net/10722/188468
ISSN
2015 Impact Factor: 0.837
2015 SCImago Journal Rankings: 0.716
SSRN
ISI Accession Number ID
References

 

DC FieldValueLanguage
dc.contributor.authorHardwick, Pen_US
dc.contributor.authorAdams, Men_US
dc.contributor.authorZou, Hen_US
dc.date.accessioned2013-09-03T04:07:45Z-
dc.date.available2013-09-03T04:07:45Z-
dc.date.issued2011en_US
dc.identifier.citationJournal Of Business Finance And Accounting, 2011, v. 38 n. 7-8, p. 987-1015en_US
dc.identifier.issn0306-686Xen_US
dc.identifier.urihttp://hdl.handle.net/10722/188468-
dc.description.abstractThis paper examines the effects of corporate governance mechanisms (measured by a set of board characteristics) on the profit efficiency of United Kingdom (UK) life insurance firms. A parametric 'stochastic frontier' approach is used to compute profit efficiency scores and second-stage regression models are estimated to test the influence of governance mechanisms on these efficiencies. We find that, viewed in isolation, board characteristics tend to have little effect on firm efficiency in the UK life insurance market. However, we do find that the proportion of non-executive directors on the board exhibits a significant effect on the profit efficiency of our sample UK insurers once the interaction effects among governance mechanisms are taken into account. The effect can be either positive or negative depending on whether there is separation of the CEO and board chairman positions and whether there is an audit committee. These results suggest that corporate governance is an inherently complex process and it is problematical to evaluate the effectiveness of an individual governance mechanism on a firm's economic performance. Insurers' profit efficiency is also negatively related to risk proxies and exhibits a concave relation with firm size. © 2011 Blackwell Publishing Ltd.en_US
dc.languageengen_US
dc.publisherBlackwell Publishing Ltd. The Journal's web site is located at http://www.blackwellpublishing.com/journals/JBFAen_US
dc.relation.ispartofJournal of Business Finance and Accountingen_US
dc.subjectCorporate Governanceen_US
dc.subjectLife Insuranceen_US
dc.subjectProfit Efficiencyen_US
dc.subjectUnited Kingdomen_US
dc.titleBoard Characteristics and Profit Efficiency in the United Kingdom Life Insurance Industryen_US
dc.typeArticleen_US
dc.identifier.emailZou, H: hongzou@hku.hken_US
dc.identifier.authorityZou, H=rp01800en_US
dc.description.naturelink_to_subscribed_fulltexten_US
dc.identifier.doi10.1111/j.1468-5957.2011.02255.xen_US
dc.identifier.scopuseid_2-s2.0-80053918440en_US
dc.relation.referenceshttp://www.scopus.com/mlt/select.url?eid=2-s2.0-80053918440&selection=ref&src=s&origin=recordpageen_US
dc.identifier.volume38en_US
dc.identifier.issue7-8en_US
dc.identifier.spage987en_US
dc.identifier.epage1015en_US
dc.identifier.isiWOS:000296459100009-
dc.publisher.placeUnited Kingdomen_US
dc.identifier.ssrn1943366-
dc.identifier.scopusauthoridHardwick, P=7004627125en_US
dc.identifier.scopusauthoridAdams, M=7403905632en_US
dc.identifier.scopusauthoridZou, H=48663306300en_US

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