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The corporate governance–risk-taking nexus: evidence from insurance companies

Author

Listed:
  • Ahmed A. Elamer
  • Aws AlHares
  • Collins G. Ntim
  • Ismail Benyazid

Abstract

Purpose - This study aims to examine the impact of internal corporate governance mechanisms on insurance companies’ risk-taking in the UK context. Design/methodology/approach - The study uses a panel data of all listed insurance companies on FTSE 350 over the 2005-2014 period. Multivariate regression techniques are used to estimate the effect of internal corporate governance mechanisms on insurance companies’ risk-taking. Findings - The results show that the board size and board meetings are significantly and negatively related to risk-taking. In contrast, the results show that board independence and audit committee size are statistically insignificant but negatively related to risk-taking. The findings are robust to alternative measures and endogeneities. Research limitations/implications - The findings have important implications for investors, managers, regulators of financial institutions and effectiveness of corporate governance reforms that have been pursued. Investors may further rely on internal corporate governance attributes to form expectations about risk-taking behaviour. Insurance companies need strong governance, as well as effective accounting and financial reporting standards, to enable proper insights into the company’s financial position. Originality/value - This study contributes to the corporate governance literature and creates significant evidence regarding the role of corporate governance in constraining risk-taking behaviour in an industry with significantly complex context.

Suggested Citation

  • Ahmed A. Elamer & Aws AlHares & Collins G. Ntim & Ismail Benyazid, 2018. "The corporate governance–risk-taking nexus: evidence from insurance companies," International Journal of Ethics and Systems, Emerald Group Publishing Limited, vol. 34(4), pages 493-509, October.
    • Handle: RePEc:eme:ijoesp:ijoes-07-2018-0103
    DOI: 10.1108/IJOES-07-2018-0103
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    Citations

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    Cited by:

    1. 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.
    2. Elamer, Ahmed A. & Ntim, Collins G. & Abdou, Hussein A. & Pyke, Chris, 2020. "Sharia supervisory boards, governance structures and operational risk disclosures: Evidence from Islamic banks in MENA countries," Global Finance Journal, Elsevier, vol. 46(C).
    3. Ahmed A. Elamer & Collins G. Ntim & Hussein A. Abdou & Andrews Owusu & Mohamed Elmagrhi & Awad Elsayed Awad Ibrahim, 2021. "Are bank risk disclosures informative? Evidence from debt markets," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(1), pages 1270-1298, January.
    4. Saleh F. A. Khatib & Dewi Fariha Abdullah & Ernie Hendrawaty & Ahmed A. Elamer, 2022. "A bibliometric analysis of cash holdings literature: current status, development, and agenda for future research," Management Review Quarterly, Springer, vol. 72(3), pages 707-744, September.
    5. Ibrahem Alshbili & Ahmed A. Elamer & Maha W. Moustafa, 2021. "Social and environmental reporting, sustainable development and institutional voids: Evidence from a developing country," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(2), pages 881-895, March.
    6. Magdalena Zioło & Iwona Bąk & Anna Spoz, 2023. "Incorporating ESG Risk in Companies’ Business Models: State of Research and Energy Sector Case Studies," Energies, MDPI, vol. 16(4), pages 1-25, February.
    7. Richard Iyere Oghuma & Anthony O. Garuba, 2021. "Corporate governance and risk disclosures in Nigerian banks," Indian Journal of Commerce and Management Studies, Educational Research Multimedia & Publications,India, vol. 12(1), pages 19-32, January.
    8. Ahmed A. Elamer & Collins G. Ntim & Hussein A. Abdou & Alaa Mansour Zalata & Mohamed Elmagrhi, 2019. "The impact of multi-layer governance on bank risk disclosure in emerging markets: the case of Middle East and North Africa," Accounting Forum, Taylor & Francis Journals, vol. 43(2), pages 246-281, April.
    9. Walter Gontarek & Yacine Belghitar, 2021. "CEO chairman controversy: evidence from the post financial crisis period," Review of Quantitative Finance and Accounting, Springer, vol. 56(2), pages 675-713, February.
    10. Ritika Gupta & Jacqueline Symss, 2023. "Does Corporate Governance Impact Risk Disclosure? An Empirical Analysis in the Indian Context," Indian Journal of Corporate Governance, , vol. 16(1), pages 9-27, June.
    11. Imad Jabbouri & Maryem Naili & Hamza Almustafa & Rachid Jabbouri, 2023. "Does ownership concentration affect banks’ credit risk? Evidence from MENA emerging markets," Bulletin of Economic Research, Wiley Blackwell, vol. 75(1), pages 119-140, January.
    12. Aryestantya Fikri Dewanta & Johan Arifin, 2020. "Corporate Risk-Taking Behaviour: Corporate Governance Perspective," Journal of Contemporary Accounting, Master in Accounting Program, Faculty of Business & Economics, Universitas Islam Indonesia, Yogyakarta, Indonesia, vol. 2(1), pages 1, May.

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