Browsing by Author "Mekonnen, Bedilu"

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    Corporate Governance Mechanisms and Financial Performance in Ethiopian Insurance Industry
    (Addis Ababa University, 2016-12) Mekonnen, Bedilu; Bekele, Teshome (PhD)
    Good corporate governance is an important pillar of the market economy and it enhances investor confidence. A strong and balanced board of directors is necessary as a supervising body for the executive management of a company with dispersed ownership and it has received new urgency due to various corporate scandals and failure. This study seeks to see impacts of corporate governance mechanism on financial performance of Insurers in Ethiopia. To address the research hypotheses needs and achieve the broad research objective, a quantitative research approach and explanatory research design were adopted in carrying out this research. The variables were chosen based on findings from both empirical and theoretical literature. Secondary data of seven insurers from 2006 to 2015 with a total of 70 observations were collected using purposive sampling technique. The study employed panel data estimation techniques and the researcher has adopted fixed effects regression technique instead of random effect models, in the case of cross section-fixed effects, the p-value is insignificant and only period fixed effects is allowed to analyse. The study analyses a range of internal corporate governance variables board size, chief executive’s compensation, board member educational qualification, female directors in the board, frequency of board meeting, board member other business managements experience, board member’s industry specific experience and the study also controls the effect of premium growth of Insurers. The regression results show that, board size, chief executive’s compensation, board member educational qualification, female directors in the board, frequency of board meeting, and board member other business managements experience, had a significant effect on the financial performance in Ethiopian insurance sector. Other variables including board member’s industry specific experience and premium growth have statistically insignificant impact on financial performance (ROA) of insurance companies in Ethiopia. So, stakeholders should give consideration to board size, chief executive’s compensation, board member educational qualification, female directors in the board, frequency of board meeting, and board member other business managements experience when they set governance policy for industry as general and for the company specifically. Keyword: Corporate Governance mechanism; agency theory, Insurers, financial performance and Ethiopia.