An Empirical Examination of Stakeholder Groups as Monitoring Sources in Corporate Governance

An Empirical Examination of Stakeholder Groups as Monitoring Sources in Corporate Governance

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Article ID: iaor201112128
Volume: 78
Issue: 3
Start Page Number: 703
End Page Number: 730
Publication Date: Sep 2011
Journal: Journal of Risk and Insurance
Authors: , , , ,
Keywords: insurance
Abstract:

Insurers are formally and informally monitored by a variety of stakeholders, including reinsurers, agents, outside board members, and regulators. While other studies have generally examined these stakeholders separately, they have not accounted for the fact that there is some relation among the stakeholder groups, and the presence of these groups is likely to be jointly determined. By empirically controlling for these potential interrelations, we create a more complete assessment of the impact of these stakeholders/monitors on insurers’ risk taking. Specifically, we find that the presence of some stakeholders offsets the degree or presence of others, and that most stakeholders/monitors are associated with a reduction of overall firm risk.

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