The Impact of Corporate Governance on the Efficiency Performance of the Thai Non-Life Insurance Industry

Wen-Yen Hsu () and Pongpitch Petchsakulwong ()
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Wen-Yen Hsu: Department of Risk Management and Insurance, Feng Chia University, Taichung, Taiwan.
Pongpitch Petchsakulwong: PhD Program in Business, Feng Chia University, Taichung, Taiwan.

The Geneva Papers on Risk and Insurance - Issues and Practice, 2010, vol. 35, issue S1, S28-S49

Abstract: This paper examines the relation between corporate governance and efficiency performance of public non-life insurance companies in Thailand over the period 2000–2007. Data envelopment analysis is used to compute an insurer's efficiency performance including technical, allocative, cost, and revenue efficiency. We then employ truncated bootstrapped regression to test the relation between efficiency performance and corporate governance. The results show that the characteristics of corporate governance influence the efficiency performance of non-life insurers. In particular, board independence, diligence, and firm size have a positive impact on the efficiency performance of the Thai non-life insurance companies. However, audit committee size, diligence, divergence between voting rights and cash flow rights, board tenure, board age, as well as board ownership have a negative impact on the efficiency performance. Finally, our empirical evidence also indicates that there is an unclear relation between an insurer's efficiency performance and the board size, the proportion of financial expertise on an audit committee, and the board compensation.

Date: 2010
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