Search results

This study aims to examine the impact of internal corporate governance mechanisms on insurance companies’ risk-taking in the UK context.

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.

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.

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.

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.

This paper aims to investigate the impact of risk disclosure practices (voluntary, mandatory and risk disclosure index) on stock return volatility, market liquidity and financial performance for insurance companies in the UK and Canada, before and after the International Financial Reporting Standards (IFRS) adoption.

The panel data analysis covers 14 insurance companies in the UK and 12 in Canada over a six-year period, three years before and three years after the implementation of IFRS. The authors collected risk disclosure data manually from the annual reports and analyzed it through QSR NVivo software for each country. The other variables are secondary data collected from Thomson Reuters Eikon and Datastream.

The results reveal that mandatory risk disclosure practices positively influence stock return volatility for UK insurers but not Canadian ones. Moreover, both mandatory and voluntary risk disclosures increase market liquidity for UK insurers. The outcomes also show a negative influence of risk disclosure practices on financial performance for both the UK and Canadian insurers. The adoption of IFRS enhances the impact of risk disclosure practices in both countries on market liquidity and financial performance.

The findings rationalize the impact of risk disclosure practices on volatility, liquidity and financial performance of UK and Canada insurers, and the effect of IFRS in triggering those results.

The findings highlight the diverse effects of voluntary and mandatory risk disclosure practices in enhancing market discipline and mitigating information asymmetry problems to investors. Regulators and policymakers could rely on the findings to amend and develop disclosure standards more frequently to assure their effectiveness. The authors also offer insights to managers to determine the levels of mandatory and voluntary disclosure practices and disclosure strategies to gain their stakeholders’ confidence.

This study contributes to the literature of risk disclosure in the insurance industry for both the UK and Canada where scarce studies are conducted. It also offers interesting implementations to investors, managers and policymakers.

Due to stakeholders’ concerns on the contribution of corporate governance in monitoring insurance companies during financial crisis, this study aims to investigate whether and how various corporate governance practices would have affected firm performance of listed and non-listed insurance firms in the UK during financial crisis.

This study uses a unique manually collected data set from listed and non-listed insurance firms in the UK and applies different regressions models to test the hypotheses and to address the endogeneity problem.

The findings show that board non-duality and the presence of a majority shareholder improve firm performance in insurance companies. Furthermore, the findings for the sub-samples indicate a stronger positive association between board of directors and firm performance in listed insurance companies after the financial crisis, while a positive impact has been found between large shareholders and external audit firms in non-listed insurance companies before and during the crisis.

The results offer important practical implications for the government, management, shareholders and policymakers. For example, regulators and policymakers should benefit from these results to revise the recommendations for corporate governance mechanisms that prove to be effective on firm performance, as well as those mechanisms that have different or unexpected effects among listed or non-listed firms and/or during the turbulent periods. Investors should be aware of those specific corporate governance mechanisms that would have higher effect on performance of UK insurance firms in which they are considering to invest in.

This study contributes to the current literature by exploring the effect of corporate governance on financial performance by comparing between listed and non-listed insurance companies during financial crisis. Further, to the best of the authors’ knowledge, this is the first study to use two new insurance-related performance measures, the revenue growth ratio and the adjusted combined ratio, as performance proxies to explore whether these new variables create any insights.

The purpose of this paper is to study the sensitivity of foreign exchange exposure through the cash flow estimation method using a sample of 59 UK insurance companies. This approach allows a decomposition of exposures into short- and long-term components. By revealing the nature of their cash flow exposures, companies can evaluate the effectiveness of their hedging programmes and focus their hedging efforts according to the nature of their exposures.

Martin and Mauer’s (2003, 2005) three-stage model is used to estimate foreign exchange rate transaction exposures for the sample of 65 UK insurance companies over the period 2004-2013. However, this paper has one important innovation to this method. Instead of the model used in previous papers, the paper uses a model from the actuarial field that was proposed by Blum et al. (2001) for modelling foreign exchange rates with their relevant constituents (inflation and interest rate).

The evidence shows that the currency transaction exposure for non-life insurers is greater than that of life insurers. Moreover, the author finds that large insurers exhibit lower frequencies of foreign exchange transaction exposure than small insurers.

The value of this paper comes from the fact that revealing the nature of cash flow exposures, companies can evaluate the effectiveness of their hedging programmes and focus their hedging efforts according to the nature of their exposures.

This study aims to explore the adoption of enterprise risk management (ERM) in developing and developed countries. Is there a similarity or difference between the two contrasting institutional markets and the reasons behind them?

The adoption of ERM is analyzed on the basis of the institutional framework. The author draws empirical evidence by comparing the cases of a British and an Indian insurance company using evidence from multiple sources. This paper focuses on extra-organizational pressures exerted by economic, social and political situations across two countries that influenced the adoption decision of ERM.

The findings of this research revealed that early adopters of ERM in different institutional markets face coercive and normative pressure but not mimetic pressure. The adoption of ERM in India and the UK is dissimilar. Companies in the British insurance market encounter higher institutional forces than those in the Indian market because of higher coercive and normative pressure. The aspirations to adopt ERM in the Indian and UK markets included improved strategic decision-making to maintain stakeholder expectations and higher standards of corporate governance. In the UK, ERM was adopted to reduce surprises and fluctuations under flexible regulations but with stricter adoption and to improve credit ratings.

Previous literature has discussed ERM adoption in similar markets or within one market with similar institutional pressure. In contrast, this research is a comparative study that explains the analysis of institutional theory in two different institutional environments in the adoption of ERM.

In this section we look at banking in the single market, new directions in financial services marketing, the validity of the 4Ps for services marketing, measuring the marketing culture of a service firm, the erosion of bank margins, Citibank's global consumer banking network, and the pricing of services.

Implications of Modern Portfolio Theory for Investment Management. The general principles of portfolio management are explained by Dobbins and Witt, Sprecher, Francis, Van Home and Fama and Miller. Portfolio theory is concerned with the choice of efficient combinations of assets and its foundation lies in the work of Markowitz. It is assumed that investors base their decisions simply on the expected return and variance of return of assets, where the variance is taken to measure risk. For any given level of risk, the optimal portfolio is that which offers the maximum expected return; and for any given expected return, the investor prefers minimum risk. The set of efficient portfolios therefore comprises those combinations of assets which promise the highest expected return corresponding to each level of risk.

Presents the results of an empirical investigation into whether the attribution by members of the public of an unfavourable reputational trait (e.g. dishonesty) to a company covaries with other traits ascribed to the same enterprise. Additionally it examines whether people aggregate successive pieces of unfavourable information received about a business to form a continuously worsening impression of it; or whether they mentally average bad news, so that successive adverse items can actually improve the overall impression – provided the later messages are not as damaging as the earlier ones. The study is based on the UK pensions mis‐selling scandal, which generated severe, long‐term media criticism of the large UK insurance companies. Hence it analyses a unique reputational management situation in that the firms involved are subject to continuous and intense scrutiny, protracted and hostile media coverage, periodic public censure by regulatory authorities, and interference in day‐to‐day management by government agencies. The proposition that pensions are an “avoidance product” is also explored.

The Growth of Institutional Shareholdings 1966–1980. Institutional investors, particularly insurance companies and pension funds, are consistent purchasers of company and overseas securities. Of particular interest is the ownership of U.K. quoted equities, rather than ownership of debentures, preference shares and overseas securities. Ownership of the ordinary share capital is of particular interest because the votes attached to equities give the holders legal powers to influence management through general meetings. The impact of the growth of institutional shareholdings on corporate management and the London Stock Exchange will be discussed in later articles. This article demonstrates the growth of institutional ownership of British industry, comments on the concentration of institutional holdings in large companies, illustrates the avoidance of new issues by financial institutions, and comments on the future pattern of U.K. share ownership.