Corporate Governance and Performance of Insurance Companies in the Saudi Market

Journal Article

2022

Published in: http://koreascience.or.kr/article/JAKO202208951462722.page

Abstract This paper investigates the association between key corporate governance characteristics and the performance of general insurance businesses listed on the Saudi stock exchange (TADAWUL). The methodology for the study is based on a pooled data collection for 11 Saudi general insurance companies from 2011 to 20. The linear regression model and the logarithm regression model are suggested to assess the relationship between performance and corporate governance characteristics. The dependent variable is firm performance measured using ROA, ROE, and Tobin’s Q. The independent variables are corporate governance variables consisting of a complete set of board and audit committee characteristics. Insurer-specific control variables are introduced. The empirical results reveal that the characteristics of corporate governance influence the performance of insurance companies. In particular, the board size, board’s tenure, the proportion of independent directors in the board, audit committee size, audit committee meeting frequency, and proportion of health insurance premiums have a positive impact. However, audit committee independence, size of the company, and proportion of reinsurance premiums have a negative impact on the performance of the Saudi general insurance companies. Finally, the empirical results indicated also that there is an unclear relationship between the performance and board meeting frequency, compensations of the Board, and the average age of the Board. Keywords: Corporate Governance, Regression Model, Logarithmic Regression, ROA, ROE, Tobin’s Q JEL Classification Code: D53, F65, G22, G34, P13

• Publication Work Type: Research Publication
• Publisher Name: The Journal of Asian Finance, Economics and Business
• Volume Number: 9
• Issue Number: 4
• Pages: 213-228