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The Impact of Corporate Governance Structure on the Efficiency Performance of Insurance Companies in Taiwan

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  • Jennifer L Wang

    (Department of Risk Management and Insurance, National Chengchi University, Taipei, Taiwan.)

  • Vivian Jeng

    (Department of Risk Management and Insurance, National Chengchi University, Taipei, Taiwan.)

  • Jin Lung Peng

    (Risk Management and Insurance Department, Shih Chien University, Taipei, Taiwan.)

Abstract

The corporate governance system of the insurance industry in Taiwan, which holds board members fully responsible for cases of bankruptcy, offers an interesting environment in which to explore its unique regulatory impact on insurers' efficiency. Using a unique panel data from Taiwan, this paper investigates whether corporate governance variables – including insider ownership, voting rights, cash-flow rights, and board composition – influence the efficiency performance of insurance companies. The analysis suggests that a high concentration of voting rights and cash-flow rights in controlling shareholders' ownership has prevailed in Taiwan's insurance industry. Our overall evidence shows that corporate governance plays an important role in influencing efficiency for property-liability insurers in Taiwan. Specifically, insider ownership, cash-flow rights, and the presence of outside directors have positive impacts, whereas concentrated ownership, deviation between voting rights and cash-flow rights, board size, and the presence of CEO duality have negative impacts on insurers' efficiency. The Geneva Papers (2007) 32, 264–282. doi:10.1057/palgrave.gpp.2510125

Suggested Citation

  • Jennifer L Wang & Vivian Jeng & Jin Lung Peng, 2007. "The Impact of Corporate Governance Structure on the Efficiency Performance of Insurance Companies in Taiwan," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 32(2), pages 264-282, April.
    • Handle: RePEc:pal:gpprii:v:32:y:2007:i:2:p:264-282
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    Citations

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    Cited by:

    1. Luisa Anderloni & Ornella Moro & Alessandra Tanda, 2019. "Governance e performance nelle imprese di assicurazioni: un’analisi bibliometrica ed una meta analisi," DEM Working Papers Series 177, University of Pavia, Department of Economics and Management.
    2. Jamali, Hisnol & T, Sutrisno & Subekti, & Assih, Prihat, 2017. "The Influence of Corporate Governance and Corporate Social Responsibility on Financial Performancewith Efficiency as Mediating Variable," INA-Rxiv t796p, Center for Open Science.
    3. Jin Lung Peng & Lih Ru Chen & Jennifer L. Wang & Larry Y. Tzeng, 2017. "Diversification Versus Strategic Focus: Evidence from Insurance Intermediaries in Taiwan," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 42(3), pages 530-555, July.
    4. Kuan-Chen Chen & Chung-I Lin, 2020. "Studies on the Determinants of Efficiency in Taiwanese Life Insurance Industry - Application of Bootstrapped Truncated Model," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 10(1), pages 1-4.
    5. Karbhari, Yusuf & Muye, Ibrahim & Hassan, Ahmad Fahmi S. & Elnahass, Marwa, 2018. "Governance mechanisms and efficiency: Evidence from an alternative insurance (Takaful) market," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 56(C), pages 71-92.
    6. Sangyong Han & Kwangmin Jung, 2023. "CEO political orientation, risk taking, and firm performance: evidence from the U.S. property-liability insurance industry," Economics of Governance, Springer, vol. 24(1), pages 1-39, March.
    7. Marina Brogi & Antonella Cappiello & Valentina Lagasio & Fabrizio Santoboni, 2022. "Determinants of insurance companies' environmental, social, and governance awareness," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(5), pages 1357-1369, September.
    8. Kwaku Ohene-Asare & Jones Kofi Anyimadu Asare & Charles Turkson, 2019. "Dynamic cost productivity and economies of scale of Ghanaian insurers," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 44(1), pages 148-177, January.
    9. Luisa Anderloni & Ornella Moro & Alessandra Tanda, 2020. "Governance and Performance in Insurance Companies: A Bibliometric Analysis and A Meta-Analysis," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 12(11), pages 1-1, November.
    10. Huang, Tai-Hsin & Lin, Chung-I & Wu, Ruei-Cian, 2019. "Assessing the marketing and investment efficiency of Taiwan’s life insurance firms under network structures," The Quarterly Review of Economics and Finance, Elsevier, vol. 71(C), pages 132-147.
    11. Ender BAYKUT & Fatih ECER & Ismail KARA, 2016. "A DEA-MALMQUIST Index Application to Analyze Inefficiency Reasons of BIST Corporate Governance Index Companies," Economics and Applied Informatics, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, issue 1, pages 14-24.
    12. Tariq, Yasir Bin & Abbas, Zaheer, 2013. "Compliance and multidimensional firm performance: Evaluating the efficacy of rule-based code of corporate governance," Economic Modelling, Elsevier, vol. 35(C), pages 565-575.
    13. Li‐Ying Huang & Yu‐Luen Ma & Nat Pope, 2012. "Foreign Ownership and Non‐Life Insurer Efficiency in the Japanese Marketplace," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 15(1), pages 57-88, March.
    14. Stefan Milojević & Marko Milašinović & Aleksandra Mitrović & Jasmina Ognjanović & Jelena Raičević & Nebojša Zdravković & Snežana Knežević & Malči Grivec, 2023. "Board Gender Diversity and Banks Profitability for Business Viability: Evidence from Serbia," Sustainability, MDPI, vol. 15(13), pages 1-16, July.
    15. Kramarić Tomislava Pavić & Miletić Marko, 2019. "The Boone Indicator as Determinant of Croatian Insurance Market Soundness," South East European Journal of Economics and Business, Sciendo, vol. 14(2), pages 1-12, December.
    16. Huicong Li & Hongliang Zhang & Sang-Bing Tsai & Aichao Qiu, 2017. "China’s Insurance Regulatory Reform, Corporate Governance Behavior and Insurers’ Governance Effectiveness," IJERPH, MDPI, vol. 14(10), pages 1-14, October.

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