Do Co-opted Boards Affect the Financial Performance of Insurance Firms?

Michael Adams () and Zafeira Kastrinaki ()
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Michael Adams: University of Bath
Zafeira Kastrinaki: Brunel University London

Journal of Financial Services Research, 2024, vol. 66, issue 3, No 4, 329-357

Abstract: Abstract We examine the performance-effects of Chief Executive Officer (CEO) co-opted boards in United Kingdom (UK) property-casualty insurers. We report that board insiders appointed in the aftermath of CEO succession reduce profitability, but bolster solvency. Enhanced solvency also results when the CEO is a financial expert and when proportionately more inside directors are selected by a CEO who is a financial expert. We further find enhanced profitability-effects for insurance experienced co-opted outside directors, while large investors improve solvency. However, the internal or external origin of the CEO does not affect financial outcomes. We consider that our results could have commercial and/or public policy implications.

Keywords: Co-opted Boards; Profitability; Solvency; Insurance (search for similar items in EconPapers)
JEL-codes: G22 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s10693-023-00418-2

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