Measuring the impact of board characteristics on the performance of Croatian insurance companies

Abstract

With the intention to analyze the effects of different board characteristics on the insurance companies’ performance, this research article explores the impact of board gender diversity and size on the performance of the insurance companies in Croatia. It analyzes the impact of characteristics of both boards, the board of directors and the supervisory board on corporate performance. The analysis, conducted using dynamic panel model, covers all insurance companies in Croatia operating in the 2007–2013 period. The main findings suggest that gender diversity at the top positions is not critical for financial success. Specifically, it is established that women acting as presidents of supervisory board deteriorate insurer’s performance measured by return on assets (ROA). This is also the case when more women are present in the board of directors. Moreover, the findings of the model measuring performance by both ROA and return on equity demonstrate that financial performance of insurance companies is negatively influenced by the number of members of the board of directors. The article upgrades the existing research by providing new support for the effects of board structure on performance in insurance industry, with specific reference to effects of gender diversity. Moreover, this study extends the existing literature in this field by introducing two corporate governance mechanisms in the analysis, that is, both the board of directors and the supervisory board. Furthermore, it is, to the authors knowledge, the first attempt to describe the effects of diversity in terms of gender on performance in the insurance sector.

Earnings Management and Dividend Payments during the Covid-19 Pandemic

“…Also, some additional R packages were applied, such as The plm package [40] necessary for estimation of panel data models, the stargazer [41] for regression tables formatting, and the car package [42] for multicollinearity testing. Research conducted by Pavić Kramarić, Aleksić, and Pejić-Bach [43] can be mentioned as the example of the panel research in the Republic of Croatia in the field of finance.…”

Determinants of insurance companies' environmental, social, and governance awareness

“…With regards to the corporate governance‐firm performance relationship (Armitage & Kirk, 1994; Datta, 2018; Diacon & O'Sullivan, 1995; O'Sullivan & Diacon, 2003), most research is restricted to specific sectors of activity (life or nonlife insurance) and corporate governance variables such as board size (Wang et al, 2007; Boubakri et al, 2008; Najjar & Salman, 2013; Gardachew, 2015; Elamer et al, 2018); Hsu & Petchsakulwong, 2010), board characteristics and composition (Adams & Jiang, 2016; Kramarić et al, 2018; Wanyama & Olweny, 2013), incentive schemes (Eckles et al, 2011; Mayers & Smith, 2010; Milidonis et al, 2017), ownership structures (Lambalk & de Graaf, 2017; Shaheen & Jaradat, 2019).…”

Composición del consejo de administración y desempeño financiero en mercados emergentes de América Latina: evidencia para Brasil, Chile y México

“…La evidencia empírica da cuenta incluso de una relación negativa y estadísticamente significativa entre el tamaño de los CA y las calificaciones de los GC (Briano-Turrent y Rodríguez-Ariza, 2016) y entre el tamaño y el desempeño de mercado (Yermack, 1996;Pavić-Kramarić et al, 2018). En el contexto analizado, King-Domínguez, Améstica-Rivas, Moraga y Arévalo (2018) encontraron que el tamaño del CA afecta positiva y significativamente el rendimiento de las empresas chilenas, cuando este es medido por el indicador ROA.…”

“…En la literatura de los GC, la diversidad demográfica se asocia con diversidad racial, etaria y de género; esta última es ampliamente debatida desde hace algunas décadas (Ararat et al, 2015). Incluso, diversos países han adoptado políticas orientadas a dar respuesta a la exigencia ciudadana de incrementar la representación femenina en puestos de alta influencia política, económica y social (Abdullah, Ismail y Nachum, 2016;Pavić-Kramarić et al, 2018). En lo que respecta a los CA, se han tomado principalmente dos rutas de acción para abordar la diversidad de género.…”

“…Por una parte, Haslam, Ryan, Kulich, Trojanowski y Atkins (2010) subrayan que los inversionistas tienden a interpretar en exceso las señales asociadas a la presencia de mujeres en el CA y su potencial efecto negativo sobre el desempeño. Por otra parte, estudios amparados en las teorías de dependencia de recursos y de agencia enfatizan en la importancia de la diversidad que las mujeres aportan a la junta directiva a través de un estilo de gestión distintivo y puntos de vistas interesantes (Briano-Turrent y Rodríguez-Ariza, 2016; Mukarram et al, 2018;Pavić-Kramarić et al, 2018). Adicionalmente, la teoría de la congruencia de roles reconoce que el efecto de la presencia femenina en puestos de liderazgo depende de la percepción social y aceptabilidad cultural (Abdullah et al, 2016;Mukarram et al, 2018).…”