Proceedings of 27th International Business Research Conference
12 - 13 June 2014, Ryerson University, Toronto, Canada, ISBN: 978-1-922069-53-5
Wen-chang Lin* and Yi-hsun Lai**
This study investigates the determinants of the board structure for U.S. property and liability insurers. Using a simultaneous equation framework, we find that insurers operating in a large scope and having a greater extent of diversification usually employ a larger board. Moreover, insurers requiring higher monitoring costs form boards tend to have a smaller board. The empirical evidence also reveals that insurers whose board members can impose constraints on managers’ power tend to have a higher degree of board independence. We also find that the constraint of CEO’s negotiation power can influence insurer’s board independence. Last, we examine whether board structure can influence insurer risk-taking. Unfortunately, the results are mixed depending on how firm risk is measured.
Field of Research: Finance, Banking
JEL Codes: G22, G34, O16
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* Corresponding Author: Wen-chang Lin, Department of Finance, National Chung Cheng University,
Chia-Yi, Taiwan, Telephone: 886-5-2720411-34210, E-mail: finwcl@ccu.edu.tw.
** Department of Finance, National Yunlin University of Science and Technology, Taiwan.
Email: bbgopher@yahoo.com