IDEAS home Printed from https://ideas.repec.org/a/ers/journl/vxxiiy2019i2p367-383.html
   My bibliography  Save this article

The Effect of Corporate Governance and Premium Growth on the Performance of Insurance Companies in Indonesia

Author

Listed:
  • Markonah Markonah
  • Achmad Sudiro
  • Surachman
  • Mintarti Rahayu

Abstract

Purpose: The aim of this study is to test the hypothesis about the effect of corporate governance and premium growth in the performance of insurance companies in Indonesia. The growth rate of insurance premiums has decreased throughout 2016, followed by a decline in performance mainly influenced by poor corporate governance. Design/Methodology/Approach: By comparing different studies we try to come to a conclusion regarding the effect of corporate governance and premium growth in the performance of insurance companies. Some previous research stated that corporate governance does not positively affect the performance of these companies. Others, have found that growth in premiums, capital growth, returns, claims ratios, and types of capital affected the growth of life insurance company assets, while the ratio of acquisition costs, administrative cost ratios, and capital did not significantly affect the growth of life insurance company assets in Indonesia. Findings: The findings in this study are the research framework which states that The Effect of Corporate Governance and Premium Growth on the Performance of Insurance Companies in Indonesia with company growth as mediation. Practical Implications: Findings of this study can be used by insurance companies as a study material to improve their performance. Originality/Value: The research hypotheses tested as they have been generated from the research framework.

Suggested Citation

  • Markonah Markonah & Achmad Sudiro & Surachman & Mintarti Rahayu, 2019. "The Effect of Corporate Governance and Premium Growth on the Performance of Insurance Companies in Indonesia," European Research Studies Journal, European Research Studies Journal, vol. 0(2), pages 367-383.
    • Handle: RePEc:ers:journl:v:xxii:y:2019:i:2:p:367-383
    as

    Download full text from publisher

    File URL: https://ersj.eu/journal/1450/download
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Novy-Marx, Robert, 2013. "The other side of value: The gross profitability premium," Journal of Financial Economics, Elsevier, vol. 108(1), pages 1-28.
    2. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    3. Yoo, Taeyoung & Jung, Dong Kwan, 2015. "Corporate governance change and performance: The roles of traditional mechanisms in France and South Korea," Scandinavian Journal of Management, Elsevier, vol. 31(1), pages 40-53.
    4. repec:eme:jrfpps:v:14:y:2013:i:2:p:286-302 is not listed on IDEAS
    5. Mao, Connie X., 2003. "Interaction of Debt Agency Problems and Optimal Capital Structure: Theory and Evidence," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 38(2), pages 399-423, June.
    6. Joseph Oscar Akotey & Frank G. Sackey & Lordina Amoah & Richard Frimpong Manso, 2013. "The financial performance of life insurance companies in Ghana," Journal of Risk Finance, Emerald Group Publishing, vol. 14(3), pages 286-302, May.
    7. Hughes, Patricia J., 1986. "Signalling by direct disclosure under asymmetric information," Journal of Accounting and Economics, Elsevier, vol. 8(2), pages 119-142, June.
    8. Madan Mohan Dutta, 2014. "Profits & Premium Earned by General Insurance Company’s After Liberalization: An Analysis," Indian Journal of Commerce and Management Studies, Educational Research Multimedia & Publications,India, vol. 5(3), pages 83-88, September.
    9. Bhattacharya, Utpal & Daouk, Hazem & Welker, Michael, 2003. "The World Price of Earnings Opacity," Working Papers 127185, Cornell University, Department of Applied Economics and Management.
    10. Emine Öner Kaya, 2015. "The Effects of Firm-Specific Factors on the Profitability of Non-Life Insurance Companies in Turkey," IJFS, MDPI, vol. 3(4), pages 1-20, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Tulus Suryanto & Darul Dimasqy & Reza Ronaldo & Mahjus Ekananda & Teuku Heru Dinata & Indra Tumbelaka, 2020. "The Influence of Liberalization on Innovation, Performance, and Competition Level of Insurance Industry in Indonesia," Sustainability, MDPI, vol. 12(24), pages 1-25, December.
    2. Souzan M. Kabbani & Essam K. Zaneldin, 2021. "The Impact of Corporate Governance on the Profitability of Insurance Firms in Syria," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 12(2), pages 150-163, April.
    3. Al-Zuhairi Ahmed Khalaf Hussein, 2024. "Analysis of Underwriting Activity and its Impact on the Profitability Ratios of the Insurance Companies Listed in the Iraq Stock Exchange," Studia Universitatis „Vasile Goldis” Arad – Economics Series, Sciendo, vol. 34(2), pages 1-31, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Markonah, 2017. "The Effect of Good Corporate Governance and Premium Growth on the Performance of Insurance Companies ," GATR Journals jfbr123, Global Academy of Training and Research (GATR) Enterprise.
    2. Kim, Sang-Joon & Bae, John & Oh, Hannah, 2019. "Financing strategically: The moderation effect of marketing activities on the bifurcated relationship between debt level and firm valuation of small and medium enterprises," The North American Journal of Economics and Finance, Elsevier, vol. 48(C), pages 663-681.
    3. de La Bruslerie, Hubert, 2016. "Does debt curb controlling shareholders' private benefits? Modelling in a contingent claim framework," Economic Modelling, Elsevier, vol. 58(C), pages 263-282.
    4. An, Suwei, 2023. "Essays on incentive contracts, M&As, and firm risk," Other publications TiSEM dd97d2f5-1c9d-47c5-ba62-f, Tilburg University, School of Economics and Management.
    5. Sievinen, Hanna Maria & Ikäheimonen, Tuuli & Pihkala, Timo, 2020. "Owners’ rule-based decision-making in family firm strategic renewal," Scandinavian Journal of Management, Elsevier, vol. 36(3).
    6. KamukaKang’ombi & Dr. Charles Muwe Mungule, 2023. "Assessing Factors Affecting Financial Performance of Insurance Companies in Zambia," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(5), pages 153-166, May.
    7. Sudipto Sarkar, 2020. "The relationship between operating leverage and financial leverage," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(S1), pages 805-826, April.
    8. Liu, Yukun & Wu, Xi, 2023. "How does shareholder governance affect the cost of borrowing? Evidence from the passage of anti-takeover provisions," Journal of Accounting and Economics, Elsevier, vol. 75(2).
    9. Sakchai Naknok, 2022. "Firm Performance Indicators as a Fundamental Analysis of Stocks and a Determinant of a Firm’s Operation," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(1), pages 190-213.
    10. Sandeep Goel & Nimisha Kapoor, 2022. "Is earnings management related to board independence and gender diversity? Sector-wise evidence from India," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 19(4), pages 363-373, December.
    11. Nooraisah Katmon & Omar Al Farooque, 2017. "Exploring the Impact of Internal Corporate Governance on the Relation Between Disclosure Quality and Earnings Management in the UK Listed Companies," Journal of Business Ethics, Springer, vol. 142(2), pages 345-367, May.
    12. de La Bruslerie, Hubert & Gueguen, Simon, 2021. "Creditors’ holdup, releveraging and the setting of private appropriation in a control contract between shareholders," International Review of Law and Economics, Elsevier, vol. 68(C).
    13. David DeBoskey & Peter Gillett, 2013. "The impact of multi-dimensional corporate transparency on us firms’ credit ratings and cost of capital," Review of Quantitative Finance and Accounting, Springer, vol. 40(1), pages 101-134, January.
    14. Wang, Kun Tracy & Kartika, Fiki & Wang, Wanbin Walter & Luo, Guqiang, 2021. "Corporate social responsibility, investor protection, and the cost of equity: Evidence from East Asia," Emerging Markets Review, Elsevier, vol. 47(C).
    15. Mai, Nhat Chi, 2012. "Market timing, taxes and capital structure: evidence from Vietnam," OSF Preprints t3mvs, Center for Open Science.
    16. Xiao, Gang, 2013. "Legal shareholder protection and corporate R&D investment," Journal of Corporate Finance, Elsevier, vol. 23(C), pages 240-266.
    17. Hsiang-Lin Chih & Chung-Hua Shen & Feng-Ching Kang, 2008. "Corporate Social Responsibility, Investor Protection, and Earnings Management: Some International Evidence," Journal of Business Ethics, Springer, vol. 79(1), pages 179-198, April.
    18. Farinha, Jorge & Mateus, Cesario & Soares, Nuno, 2018. "Cash holdings and earnings quality: evidence from the Main and Alternative UK markets," International Review of Financial Analysis, Elsevier, vol. 56(C), pages 238-252.
    19. Nimisha Kapoor & Sandeep Goel, 2017. "Board Characteristics, Firm Profitability and Earnings Management: Evidence from India," Australian Accounting Review, CPA Australia, vol. 27(2), pages 180-194, June.
    20. Mauer, David C. & Sarkar, Sudipto, 2005. "Real options, agency conflicts, and optimal capital structure," Journal of Banking & Finance, Elsevier, vol. 29(6), pages 1405-1428, June.

    More about this item

    Keywords

    Corporate Governance; Insurance Premium; Corporate Performance; Company Growth.;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ers:journl:v:xxii:y:2019:i:2:p:367-383. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Marios Agiomavritis (email available below). General contact details of provider: https://ersj.eu/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.