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

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...

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Published inGeneva papers on risk and insurance. Issues and practice Vol. 32; no. 2; pp. 264 - 282
Main Authors Wang, Jennifer L., Jeng, Vivian, Peng, Jin Lung
Format Journal Article
LanguageEnglish
Published London Palgrave Macmillan 01.04.2007
SeriesThe Geneva Papers on Risk and Insurance - Issues and Practice
Subjects
Business structures
Corporate governance
Corporate structure
Costs
Data envelopment analysis
Directors
Efficiency
Financial services
Financial Services Modernization Act 1999-US
Group health insurance
Hypotheses
Impact analysis
Insurance companies
Insurance industry
Insurance providers
Insurance regulation
Liability
Liability insurance
Life insurance
Property liability insurance
Social responsibility
Stockholders
Studies
Voting rights
Taiwan
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Summary: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.
ISSN:1018-5895
1468-0440
DOI:10.1057/palgrave.gpp.2510125