Impacts of Corporate Governance Mechanism on Financial Performance of Selected Insurers in Ethiopia
No Thumbnail Available
Date
2015-06
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Addis Ababa University
Abstract
Corporate governance has become an issue of global significance and 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. In order to achieve this objective,
the study uses mixed research approach. Panel data covering ten year period from 2005 – 2014
are analyzed for nine insurance companies. Also in-depth interview was conducted with selected
company board chairmen. The study analyses a range of internal corporate governance
variables board size, chief executive compensation, educational qualification of directors
,presence of
female directors, frequency of board meeting, other business management
experience of directors, industry specific experience of directors and the study also controls the
effect of premium growth of Insurers. The Fixed effects technique has been applied to find out
the most significant variables from considered internal corporate governance variable. The
regression results show that, chief executive compensation, educational qualification of
directors, other business management experience of directors, and industry specific experience
of directors has positive and significant effects on financial performance of Insurers’ proxy by
ROA. On the other hand, board size and presence female directors don’t have statically
significant impacts on Insurers’ performance. In addition Contrary to theoretical prediction
frequency of board meeting does not have significant effects on Insurers performance. So,
stakeholders should give consideration to chief executive compensation, educational
qualification of directors, other business management experience of directors, and
industry
specific experience of directors when they set governance policy for industry as general and for
the company specifically.
Keyword: Corporate Governance mechanism agency theory Insures, financial performance and
Ethiopia
Description
Keywords
Corporate governance mechanism agency theory Insures; financial performance and Ethiopia