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An examination of the benefits for privately‐held and mutual insurers’ CEOs following an IPO

Kulkanya Napompech (College of Administration and Business, PO Box 10318 Louisiana Tech University, Ruston, LA 71272)
Mark Kroll (Department Head of Management and Marketing, Maurice Tatum Professor of Business, College of Administration and Business, CAB Room No. 120, PO Box 10318, Louisiana Tech University, Ruston, LA 71272)
Roger Shelor (Finance Department, College of Business, 222 Copeland Hall, Ohio University, Athens, Ohio 45701‐2979)

Managerial Finance

ISSN: 0307-4358

Article publication date: 1 December 2002

534

Abstract

This study examines compensation changes among top executives of formerly privately held stock insurers and mutual insurers at the time around an initial public offering. This study explains how CEO compensation changes following an IPO differ between these two types of insurers owing to their differing agency characteristics. The results also show that CEOs’ benefits increase materially following an IPO. The authors find evidence that reduced ownership retention by managers increases agency costs and CEOs of mutual insurers exploit their positions and increase their reward at the expense of policyholders.

Keywords

Citation

Napompech, K., Kroll, M. and Shelor, R. (2002), "An examination of the benefits for privately‐held and mutual insurers’ CEOs following an IPO", Managerial Finance, Vol. 28 No. 12, pp. 63-81. https://doi.org/10.1108/03074350210768211

Publisher

:

MCB UP Ltd

Copyright © 2002, MCB UP Limited

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