Are all mutuals the same? Evidence from CEO turnover in the US property–casualty insurance industry

Abstract

Organizational form in insurance has been widely studied in the prior literature. Although researchers have recognized sub-types of stock insurers, mutuals have always been considered as a single homogeneous category. To the extent that mutual sub-types behave differently, considering all mutuals the same can result in misleading conclusions. The present study aims to remedy this gap in the literature by considering the full range of mutual firm types. Mutuals are classified as familycontrolled, association-controlled, and pure mutuals with various sub-types within each group. We analyze corporate governance among mutual sub-types in the U.S. property-casualty (P-C) insurance industry by studying CEO turnover, particularly nonroutine turnover. Multinomial probit analysis is used to test for relationships between mutual sub-types and turnover. The principal finding is that all mutuals are not the same. The probability of nonroutine CEO turnover is lowest for familycontrolled, non-association mutuals and highest for association-controlled mutuals. Non-association mutuals with family-member CEOs have the lowest turnover rates among all ownership types. Thus, future research should utilize more detailed organizational form categories than the traditional literature.

Board characteristics and CEO turnover–performance relationship: evidence from India

“…The present study has adopted industry-adjusted return on assets (IROA) as the FP measure following prior literature on CTURN (Visintin et al , 2017; Cheng et al , 2020; Vandebeek et al , 2021). This proxy will aid in investigating how well boards respond to poor FP relative to its industry, leading up to turnover (Kaplan and Minton, 2012; Cheng et al , 2020). Further, this measure controls for the industry-wide shocks to FP, that is, those factors that are not within CEOs’ control (Morck et al , 1988).…”

“…The problem can become graver in family firms where CEOs are members of the founding families who exercise significant control over the firms through large ownership positions (Volpin, 2002; Rachpradit et al , 2012; Rizzotti et al , 2017; Visintin et al , 2017; Cheng et al , 2020; Zhu et al , 2021). Emotional ties also play a vital role in influencing the business dynamics of these firms (Audretsch et al , 2007).…”