IDEAS home Printed from https://ideas.repec.org/a/taf/applec/v58y2026i5p833-845.html

CEO compensation for luck and skill and corporate governance in U.S. property-liability insurance firms

Author

Listed:
  • Sangyong Han
  • Gyu Dong Kim
  • Jeungbo Shim

Abstract

We examine whether CEO compensation is tied to both luck and skill in U.S. property-liability insurance firms. To estimate luck and skill, an insurer’s underwriting margin is regressed on the industry-wide underwriting margin, with the resulting predicted value (the residual) representing luck (skill). The results show that CEO compensation is positively related to exogenous factors (luck), providing support for the skimming view and that CEO skill is an important determinant of CEO compensation as well. Notably, well governed insurers show less CEO pay for luck than poorly governed insurers, whereas insurers with strong corporate governance exhibit greater CEO pay for managerial skill than those with weak corporate governance. These results are robust to an alternative measure of luck and skill. Our findings provide important implications for the role of corporate governance in developing efficient CEO compensation arrangements in the property-liability insurance industry.

Suggested Citation

  • Sangyong Han & Gyu Dong Kim & Jeungbo Shim, 2026. "CEO compensation for luck and skill and corporate governance in U.S. property-liability insurance firms," Applied Economics, Taylor & Francis Journals, vol. 58(5), pages 833-845, January.
    • Handle: RePEc:taf:applec:v:58:y:2026:i:5:p:833-845
    DOI: 10.1080/00036846.2025.2459368
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/00036846.2025.2459368
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/00036846.2025.2459368?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    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:taf:applec:v:58:y:2026:i:5:p:833-845. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RAEC20 .

    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.