China’s Insurance Regulatory Reform, Corporate Governance Behavior and Insurers’ Governance Effectiveness

Huicong Li, Hongliang Zhang, Sang-Bing Tsai and Aichao Qiu
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Huicong Li: Business School of Beijing Technology and Business University, Beijing 100048, China
Hongliang Zhang: Business School of Beijing Technology and Business University, Beijing 100048, China
Sang-Bing Tsai: Zhongshan Institute, University of Electronic Science and Technology of China, Zhongshan 528400, China
Aichao Qiu: Yingda International Trust Co. Ltd., Beijing 100005, China

IJERPH, 2017, vol. 14, issue 10, 1-14

Abstract: External regulation is an important mechanism to improve corporate behavior in emerging markets. China’s insurance governance regulation, which began to supervise and guide insurance corporate governance behavior in 2006, has experienced a complex process of reform. This study tested our hypotheses with a sample of 85 firms during 2010–2011, which was obtained by providing a questionnaire to all of China’s shareholding insurance companies. The empirical study results generally show that China’s insurance governance effectiveness has significantly improved through strict regulation. Insurance corporate governance can improve business acumen and risk-control ability, but no significant evidence was found to prove its influence on profitability, as a result of focusing less attention on governance than on management. State ownership is associated with higher corporate governance effectiveness than non-state ownership. Listed companies tend to outperform non-listed firms, and life insurance corporate governance is more effective than that of property insurers. This study not only contributes to the comprehensive understanding of corporate governance effectiveness but also to the literature by highlighting the effect of corporate governance regulation in China’s insurance industry and other emerging economies of the financial sector.

Keywords: corporate governance regulation; corporate governance effectiveness; green governance; green operation (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2017
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