Clifford Appasamy, Matthew Lamport, Boopendra Seetanah, Raja Vinesh Sannassee

7/25/2019 Clifford Appasamy, Matthew Lamport, Boopendra Seetanah, Raja Vinesh Sannassee

http://slidepdf.com/reader/full/clifford-appasamy-matthew-lamport-boopendra-seetanah-raja-vinesh-sannassee 1/50

2013 Cambridge Business & Economics Conference ISBN : 9780974211428

Corporate Governance and Firm Performance:

Evidence from the Insurance Industry of Mauritius

u!"ors

C#ifford $$asam% 'inancia# Ser(ices Commission )auri!ius)a!!"e* +am$or! ,ni(ersi!% of )auri!iusBoo$endra See!ana" ,ni(ersi!% of )auri!ius

-a.a /ines" Sannassee ,ni(ersi!% of )auri!ius

ABSTRACT

oes good cor$ora!e go(ernance "a(e a re#a!ions"i$ *i!" firm $erformance for !"e insurance

indus!r% of )auri!ius "e re#a!ions"i$ be!*een cor$ora!e go(ernance and $erformance "as

been eamined in e!an! #i!era!ure using main#% uan!i!a!i(e informa!ion deri(ed from annua#

re$or!s or o!"er $ub#is"ed financia# s!a!emen!s of com$anies !"us %ie#ding mied findings5

S!udies focus on !"e uan!i!a!i(e re#a!ions"i$ be!*een cor$ora!e go(ernance and $erformance

*"ic" occu#! !"e fac! !"a! an im$ro(ed Cor$ora!e 6o(ernance frame*or s"ou#d !"eore!ica##%

%ie#d be!!er be"a(iours ac!ions from !"ose res$onsib#e of go(ernance in a com$an%5

o fi## !"is ga$ !"is s!ud% ado$!s a !"rees!age $rocess *"ere in addi!ion !o !"e uan!i!a!i(e

ana#%sis i5e5 a mu#!i$#e regression mode# be!*een obins ; as de$enden! (ariab#e and

inde$enden! (ariab#es iden!ified in #i!era!ure and deri(ed from informa!ion in !"e annua# re$or!s

of eac" insurer a Cor$ora!e 6o(ernance c!ion Inde is cons!ruc!ed using informa!ion

co##ec!ed !"roug" a sur(e% on a## insurance com$an% and fina##% de(e#o$s a mu#!i$#e regression

mode# *"ere !"e Cor$ora!e 6o(ernance c!ion Inde of eac" insurer is regressed agains!

obins ;5 "e resu#!s s"o* !"a! !"ere is a re#a!ions"i$ be!*een cor$ora!e go(ernance and

$erformance in !"e insurance indus!r% in )auri!ius *"ic" is confirmed ua#i!a!i(e#% b% !"e

Cor$ora!e 6o(ernance c!ion Inde and !"e regression resu#!s of !"e Cor$ora!e 6o(ernance

c!ion inde and $erformance measured in !erms of obins ;5

<u#% 23 2013Cambridge ,=




! I"TR#$%CTI#"

Cor$ora!e 6o(ernance is defined as !"e s%s!em b% *"ic" com$anies are direc!ed and con!ro##ed5

I! consis!s main#% of s%s!ems and $rocesses es!ab#is"ed b% !"ose res$onsib#e of go(ernance i5e5

!"e irec!ors for !"e effec!i(e and efficien! o$era!ion of !"e organi>a!ion so !"a! i! ac"ie(es i!s

s!ra!egic goa#s and ob.ec!i(es5 Cor$ora!e go(ernance $ro(ides !"e s!ruc!ure !"roug" *"ic"

ob.ec!i(es are se! !"e means of a!!aining !"ose ob.ec!i(es are defined and !"e mec"anisms for

moni!oring $erformance are de!ermined5

Cor$ora!e 6o(ernance #i!era!ure da!es bac !o more !"an 230 %ears ago5 In 177? dam Smi!"

s!a!ed on Cor$ora!e 6o(ernance: @The directors of [joint-stock] companies, however, being the

managers rather of other people’s money than of their own, it cannot well be expected, that they

should watch over it with the same anxious vigilance with which the partners in a private

copartnery freuently watch over their own! "ike the stewards of a rich man, they are apt to

consider attention to small matters as not for their master’s honour, and very easily give

themselves a dispensation from having it! #egligence and profusion, therefore, must always

prevail, more or less, in the management of the affairs of such a companyA

Sir drian Cadbur% 1999 en#arged !"e c#assica# defini!ion of cor$ora!e go(ernance and s!a!es

!"a! @it DCor$ora!e 6o(ernance is concerned with the balance between economic and social

goals, and between individual and communal goals$ the aim [being] to align as nearly as

possible the interests of individuals, corporations and society5A

coun!r%s econom% de$ends inter alia on !"e dri(e and efficienc% of i!s com$anies5

"erefore !"e effec!i(eness *i!" *"ic" direc!ors disc"arge !"eir res$onsibi#i!ies de!ermines !"e

coun!r%s com$e!i!i(e $osi!ion5 "e board of direc!ors mus! be free !o dri(e !"eir com$anies

for*ard bu! eercise !"a! freedom *i!"in a frame*or of effec!i(e accoun!abi#i!% F !"e essence

of an% s%s!em of good cor$ora!e go(ernance5

6ood cor$ora!e go(ernance s"ou#d !"erefore ra!iona##% $ro(ide $ro$er incen!i(es for !"e board

of direc!ors and managemen! !o $ursue ob.ec!i(es !"a! are in !"e in!eres!s of !"e com$an% and

s"are"o#ders faci#i!a!ing effec!i(e moni!oring !"ereb% encouraging firms !o use resources more

efficien!#%5


1




Go*e(er !"ere is no c#ear e(idence !o sugges! !"a! be!!er cor$ora!e go(ernance s%s!em

en"ances firm $erformance in differen! mare! se!!ings5 'ur!"er !"ere is no uneui(oca#

e(idence !"a! go(ernance $rac!ices are endogenous =#ein S"a$iro and Houng 200 and

in(es!ors are s!i## muc" sce$!ic abou! !"e eis!ence of a #in be!*een good go(ernance and

$erformance indica!ors and @ for many practitioners and academics in the field of corporate

governance, this remains their search for the %oly &rail ' the link between returns and

governanceA Brad#e% 20045

Ne(er!"e#ess increasing (o#ume of crosscoun!r% and indi(idua# coun!r% #e(e# e(idence some

of *"ic" are discussed in !"is s!ud% main#% sugges! a $osi!i(e #in be!*een cor$ora!e

go(ernance and firm $erformance5

6i(en !"e im$or!ance and re#e(ance of !"e Insurance Indus!r% in )auri!ius in !erms of i!scon!ribu!ion !o !"e 6ross omes!ic Jroduc! !"is s!ud% in(es!iga!es *"e!"er cor$ora!e

go(ernance "as a re#a!ions"i$ *i!" com$an% $erformance in !"e insurance indus!r% of

)auri!ius5 In !"e #as! 2 %ears !"e )auri!ian Insurance Indus!r% *i!nessed significan!

conso#ida!ion and a s!reng!"ened regu#a!or% frame*or *i!" !"e es!ab#is"men! of !"e 'inancia#

Ser(ices Commission as !"e regu#a!or for !"e insurance indus!r% in 20015 o da!e !"ere are 21

Insurers o$era!ing in !"e insurance indus!r% carr% on 6enera# and +ong erm Insurance

business5

!& #'ER'IE( #F T)E MA%RITIA" I"S%RA"CE I"$%STR*

uring !"e $as! !"ir!% %ears !"e )auri!ian econom% "as di(ersified from a sugarcane mono

cro$ econom% in !"e 1970Ks !o one based on sugar manufac!uring main#% !e!i#es and

garmen!s and !ourism in !"e 1980Ks5 6#oba# business and 'ree$or! ac!i(i!ies "a(e a#so been

gro*ing con!inuous#% since !"e mid 1990s5 ccording !o #i Lafar 2011 @in s$i!e of i!s sma##

economic si>e #o* endo*men! of na!ura# resources and remo!eness from *or#d mare!s

)auri!ius "as !ransformed i!se#f from a $oor sugar econom% in!o one of !"e mos! successfu#

economies in frica in recen! decades #arge#% !"roug" re#iance on !rade#ed de(e#o$men!5A

"e gross domes!ic $roduc! 6J rose from -s 122410 mi##ions in 2000 a! mare! $rices !o

-s 32349 mi##ions in 2011 a! mare! $rices5 'inancia# in!ermedia!ion sec!or *"ic" inc#udes


2




!"e insurance indus!r%s in$u! con!ribu!ed !o abou! 757M !o 6J in 20005 'inancia#

In!ermedia!ion sec!ors con!ribu!ion !o 6J increased !o a$$roima!e#% 859M in 20115

ccording !o !"e regis!er of insurers "e#d b% !"e 'inancia# Ser(ices Commission 'SC as

reuired b% !"e Insurance c! 200 as a! 31 ecember 2011 !"ere *ere 21 Insurers o$era!ing in!"e domes!ic insurance indus!r%5 8 *ere #icensed !o carr% on +ong erm Insurance business and

13 *ere #icensed !o carr% on 6enera# insurance business5

Before enac!men! of !"e Insurance c! 200 insurers cou#d carr% on bo!" 6enera# and +ong

erm Insurance business in one com$an%5 "e% *ere no*n as com$osi!e insurers5 Go*e(er

for be!!er $o#ic%"o#der $ro!ec!ion and in #ine *i!" in!erna!iona# s!andards !"e Insurance c!

200 $ro"ibi!s com$osi!e insurers5 s suc" com$anies o$era!ing as com$osi!e insurers "a(e "ad

!o ei!"er se$ara!e !"eir insurance business !o be carried on in !*o dis!inc! com$anies or discon!inue one ca!egor% of insurance business a#!oge!"er5 "e insurance sec!or is "ig"#%

concen!ra!ed5 "e !"ree #arges! grou$s "a(e more !"an 7M $ercen! of !o!a# asse!s5 es$i!e !"is

"ig" #e(e# of concen!ra!ion !"e insurance indus!r% is com$e!i!i(e o$era!ing *i!" "ig" efficienc%

and reasonab#e $rofi!abi#i!%5 ccording !o /i!!as 2003 !"e )auri!ian insurance sec!or "as

!aen !ime !o de(e#o$ and reac"ed a re#a!i(e#% *e## de(e#o$ed s!age5 /i!!as 2003 fur!"er

recognises !"a! the success of the insurance market in (auritius underscores the benefits of

operating in a macroeconomic stability and a sound regulation, free from pervasive premium,

product, investment and reinsurance controls that have bedevilled the insurance markets of so

many developing countries around the world 5 "e #as! !en %ears "a(e *i!nessed !"e gro*!" and

resi#ience of !"e )auri!ian insurance mare!5 C"ar! 1 be#o* s"o*s !"e gro*ing !rend of gross

$remium and !o!a# asse!s of !"e )auri!ian insurance indus!r% from %ears 2000 !o 20115


3




Chart + Gro,th of Gross Premium and Tota- Assets over &...+&.

o!a# $remiums accoun!ed for 4 M of 6ross omes!ic Jroduc! @6JA a! mare! $rices *"i#s!

insurance com$an% asse!s !o 18M of 6J in 20015 In 2011 !o!a# gross $remium and !o!a#

asse!s con!ribu!ed !o ?M and 29M of 6J res$ec!i(e#%5

C"ar! 2 be#o* s"o*s !"e insurance sec!or and 6J gro*!" o(er 2001 !o 2011

Chart &: Insurance Sector and G$P Gro,th &.. / &.


4




!0 R ESEARC) PR#B1EM

"ere are !"eore!ica# reasons !o assume !"a! an im$ro(ed cor$ora!e go(ernance frame*or *i##

#ead !o be!!er firm $erformance !"roug" increase e$ec!ed cas" f#o*s accruing !o !"e in(es!orsand a reduc!ion in !"e cos! of ca$i!a#5

Go*e(er man% com$anies s!i## remain uncon(inced and !o !"em @ the practical adoption of

good governance principles has been )patchy* at best, with )form over substance* often the

normA Brad#e% 20045 oes good cor$ora!e go(ernance "a(e a re#a!ions"i$ *i!" firm

$erformance for !"e insurance indus!r% of )auri!ius

!2 AIM #F RESEARC)

## insurance com$anies "a(e !o ad"ere !o bes! cor$ora!e go(ernance $rac!ices as #aid do*n in

!"e Code of Cor$ora!e 6o(ernance issued b% !"e Na!iona# Commi!!ee on Cor$ora!e 6o(ernance

for )auri!ius and !"e Insurance c! 2005 "e aim of !"is s!ud% is !o eamine !"e re#a!ions"i$

be!*een cor$ora!e go(ernance and $erformance in insurance com$anies in )auri!ius5

!3 PAPER #%T1I"E

"e remainder of !"is $a$er is s!ruc!ured as fo##o*s:

Sec!ion 2 $ro(ides a #i!era!ure re(ie* of !"e conce$!ua# mode#s of cor$ora!e go(ernance and !"e

frame*or of cor$ora!e go(ernance !"a! are used as $arame!ers !o de(e#o$ !"e regression

mode#s5 Sec!ion 3 describes !"e me!"odo#og% mode# and $arame!ers used5 Sec!ion 4 discusses

!"e resu#!s and findings and Sec!ion conc#udes5





&! 1ITERAT%RE RE'IE(

&! I"TR#$%CTI#"

Cor$ora!e go(ernance is defined !"e se! of $rocedures $rocesses be"a(iours and a!!i!udes

according !o *"ic" an organisa!ion is direc!ed and con!ro##ed5 "e cor$ora!e go(ernance

frame*or s$ecifies !"e dis!ribu!ion of rig"!s and res$onsibi#i!ies among !"e differen!

$ar!ici$an!s in !"e organisa!ion F suc" as !"e board managers s"are"o#ders and o!"er

s!ae"o#ders F and #a%s do*n !"e ru#es and $rocedures for decisionmaing5 I! is !"e se! of

mec"anisms $u! in $#ace !o o(ersee !"e *a% organisa!ions are managed and #ong!erm

s"are"o#der (a#ue is en"anced5

&!& C#RP#RATE G#'ER"A"CE FRAME(#R4

-esearc"ers and $rac!i!ioners !"a! "a(e s!udied !"e re#a!ions"i$ be!*een cor$ora!e go(ernance

and $erformance used differen! Cor$ora!e 6o(ernance frame*ors5 Em$irica# s!udies focus on

s$ecific dimensions or a!!ribu!es of !"e cor$ora!e go(ernance frame*or #ie board s!ruc!ure

and com$osi!ionO !"e ro#e of inde$enden! noneecu!i(e direc!orsO o!"er con!ro# mec"anisms

suc" as direc!or and manageria# s"are"o#dings o*ners"i$ concen!ra!ion deb! financing

eecu!i(e #abour mare! and cor$ora!e con!ro# mare!O !o$ managemen! and com$ensa!ionO

ca$i!a# mare! $ressure and s"or!!ermismO socia# res$onsibi#i!ies and in!erna!iona#i>a!ion5

P(er !"e %ears researc" under!aen on !"e re#a!ions"i$ be!*een cor$ora!e go(ernance

frame*or and com$an% $erformance s"o*ed mied findings some $osi!i(e neu!ra# or

nega!i(e re#a!ions"i$s5

2.4.1 Independent Directors

n inde$enden! direc!or is defined $er !"e Code of Cor$ora!e 6o(ernance as a direc!or *"o is a

non eecu!i(e5 Ge S"e is no! a re$resen!a!i(e of or an immedia!e fami#% s$ouse c"i#d $aren!

grand$aren! or grandc"i#d direc!or based on s"are"o#ders agreemen! of a significan!

s"are"o#der5 Ge s"e *as no! in em$#o%men! as an eecu!i(e direc!or for !"e $receding 3 %ears

b% !"e com$an% or !"e grou$5 Ge S"e is no! a $rofessiona# ad(isor !o !"e Com$an% or grou$<u#% 23 2013Cambridge ,=

?




no! a significan! em$#o%er deb!or credi!or or cus!omer of !"e Com$an% and !"e 6rou$ and

"o#ds no con!rac!ua# re#a!ions"i$ *i!" !"e Com$an% or 6rou$ or "as no ma!eria# business or

o!"er re#a!ions"i$ *i!" !"e Com$an% or !"e 6rou$5

I! ma% be argued !"a! inde$enden! noneecu!i(e direc!ors bring more inde$endence on !"e board gi(en !"eir @nore#a!ions"i$sA *i!" !"e com$an%5 "e $ar!ici$a!ion of inde$enden! non

eecu!i(e direc!ors as ad(oca!ed b% !"e Code of Cor$ora!e 6o(ernance for )auri!ius is

designed !o en"ance !"e abi#i!% of !"e firm !o $ro!ec! i!se#f agains! !"rea!s from !"e en(ironmen!

and a#ign !"e firms resources for grea!er ad(an!age5

Go*e(er researc" on !"e re#a!ions"i$ be!*een inde$enden! direc!ors Das an a!!ribu!e of

cor$ora!e go(ernance and $erformance %ie#d *i!" mied resu#!s5 Q"i#e !"e s!ud% b% Qen e! a#5

2002 found a nega!i(e re#a!ions"i$ be!*een !"e number of inde$enden! noneecu!i(edirec!ors on !"e board and $erformance B"aga! and B#ac 2002 found no re#a!ions"i$

be!*een inde$enden! non eecu!i(e direc!ors and obins ;15 I! s"ou#d be no!ed !"a! according

!o sec!ion 30 of Insurance c! 200 @no insurer shall have a board of directors composed of

less than + natural persons of which per cent shall be independent directors, or such other

number and percentage as may be approved by the ./0 A5

Josi!i(e findings

• Beas#e% 199? under!oo an ana#%sis of 10 com$anies *"ere 7 of !"ese com$anies

"a(e been (ic!ims of frauds @fraud com$aniesR and 7 com$anies "a(e no! been

in(o#(ed in frauds @nofraud com$aniesA5 Beas#e% found !"a! nofraud com$anies

"a(e boards of direc!ors *i!" significan!#% "ig"er $ercen!ages of inde$enden! direc!ors

!"an fraud firms5 )oreo(er !"e #ie#i"ood of financia# s!a!emen! fraud decreases *"en

!"e number of inde$enden! direc!or on !"e board increase5

• sur(e% of 1 =orean firms under!aen b% B#ac e! a#! 200? s"o* !"a! firms *i!"0M inde$enden! direc!ors "a(e 0513 "ig"er obins ; roug"#% 40M "ig"er s"are

$rice *"ic" is consis!en! *i!" !"e (ie* !"a! grea!er board inde$endence causa##%

$redic!ing "ig"er s"are $rices in emerging mare!s5

1 obins ; measured as !"e mare! (a#ue of eui!% ca$i!a# and !"e boo (a#ue of firms deb!di(ided b% boo (a#ue of asse!s<u#% 23 2013Cambridge ,=

7




• nderson )ansi and -eeb 2004 s"o* !"a! !"e cos! of deb! $roied b% bond %ie#d

s$reads is in(erse#% re#a!ed !o board inde$endence5 Simi#ar#% Go 200 and Bro*n

and Ca%#or 2004 find s!rong and $osi!i(e corre#a!ion be!*een noneecu!i(e

inde$enden! direc!ors and cor$ora!e $erformance5

Neu!ra# or nega!i(e findings

• Se(era# sur(e%s of em$irica# s!udies find no con(incing e(idence !"a! more inde$enden!

direc!ors on !"e board im$ro(e firm $erformance 'osberg 1989O Germa#in and

Qeisbac" 1991O +in 199?O B"aga! and B#ac 1999 20025

• Ganiffa and Gudaib 200? argues !"a! mare! $ercei(es mu#!i$#e direc!ors"i$ as

un"ea#!"% and do no! add (a#ue !o cor$ora!e $erformance5

2.4.2 Separation of Chairperson and CEO role

Se(era# s!udies "a(e eamined !"e se$ara!ion of ro#es of CEP and c"air$erson5 I! is *ide#%

argued !"a! !"e $rinci$a#agen! $rob#em is more ob(ious in a business en(ironmen! *"ere !"e

same $erson "o#ds !"e $osi!ions of CEP and c"air$erson5 CEP dua#i!% "as a *a% of inf#uencing

!"e o(era## $erformance of !"e firm5 "e ra!iona#e for !"e se$ara!ion of CEP and c"air$ersons

$osi!ion *as firs! sugges!ed b% 'ama and <ensen 19835 Hermac 199? re$or!ed !"a! firms are

more (a#uab#e *"en !"e CEP and c"air$ersons $osi!ions are "e#d se$ara!e#%5 o da!e "o*e(er

em$irica# e(idence on !"e CEP dua#i!% is mied5 I! s"ou#d be no!ed !"a! se$ara!ion of !"e CEP

and c"airman ro#e is manda!or% for a## insurers in )auri!ius according !o !"e Code of Cor$ora!e

6o(ernance and !"e Insurance c! 2005

Josi!i(e findings

• Ba#iga )o%er and -ao 199? find *ea e(idence !"a! dua#i!% of board c"airman and

CEP affec! #ong !erm $erformance of ,S com$anies5 Pn !"e o!"er "and -ec"ner and

a#!on 1991 find !"a! firms o$!ing for inde$enden! #eaders"i$ consis!en!#% ou!$erform

!"ose re#%ing u$on CEP dua#i!%5


8




• Hermac 199? and Bro*n and Ca%#or 2004 a#so su$$or! !"e no!ion !"a! firms are

more (a#uab#e *"en !"e CEP and board c"air $osi!ions are se$ara!e5


• 'in#es!ein and (eni 1994 find !"a! board (igi#ance is $osi!i(e#% associa!ed *i!"

CEP dua#i!% and associa!ion is s!ronger *"en bo!" informa# CEP $o*er and firm

$erformance are #o*5

2.4.3 Board Committees

"e Board of irec!ors is !"e foca# $oin! of !"e cor$ora!e go(ernance s%s!em and is u#!ima!e#%

accoun!ab#e and res$onsib#e for !"e $erformance and affairs of !"e com$an%5 e#ega!ingau!"ori!% !o board commi!!ees does no! in an% *a% disc"arge !"e board of direc!ors of i!s du!ies

and res$onsibi#i!ies5 Board commi!!ees are a mec"anism !o assis! board and i!s direc!ors !o

disc"arge !"eir du!ies !"roug" a more com$re"ensi(e e(a#ua!ion of s$ecific issues fo##o*ed b%

*e## considered recommenda!ions !o !"e board5

Josi!i(e findings

•

bbo!! Jar and Jarer 2000 re$or! !"a! in !"e ,S firms *i!" audi! commi!!ees *"ic"fo##o*s !"e minimum !"res"o#ds of bo!" ac!i(i!% a! #eas! !*o mee!ings in a %ear and

inde$endence are #ess #ie#% !o be sanc!ioned b% !"e SEC for fraudu#en! or mis#eading

re$or!ing5

• =#ein 2002 finds a nega!i(e re#a!ion be!*een audi! commi!!ee inde$endence and

abnorma# accrua#s5 'or ,S #arge $ub#ic com$anies a nomina!ion commi!!ee dis$#a%s

be!!er $erformance under bo!" mare!based and accoun!ingbased measures o(er

com$anies *i!"ou! suc" commi!!ee Qa##ace and Cra(ens 19935



9




• E>>ame# and Qa!son 1997 do no! find s!rong re#a!ions"i$ be!*een $a% and

$erformance among !"e ,= com$anies *i!" remunera!ion commi!!ee and o!"er

go(ernance (ariab#e5 Simi#ar#% =#ein 1998 finds no a$$aren! corre#a!ion be!*een

s"are $rices and !"e com$osi!ion of s$ecific o(ersig"! board commi!!ees5

2.4.4 Managerial Ownership

I! ma% be argued !"a! manageria# o*ners"i$ of s"are"o#ding in !"e organisa!ion affec!s !"e

cor$ora!e go(ernance s%s!em5 )anagers "a(ing a s!ae in !"e organisa!ion ma% be argued !o

fa(our s"or! !erm decisions !"a! increase $rofi!abi#i!% "o*e(er se(era# s!udies find mied

findings be!*een manageria# o*ners"i$ and $erformance5

Josi!i(e findings

• Gambric and <acson 2000 find manageria# "o#dings !o be associa!ed *i!"

subseuen! cor$ora!e $erformance and managers *i!" a meaningfu# s!ae in !"e

organi>a!ion are $i(o!a# fac!or im$ro(ing cor$ora!e go(ernance5

• C"en 6uo and )ande 2003 "o*e(er re$or! a mono!onic re#a!ion be!*een obins ;

and manageria# o*ners"i$5 ,sing 123 <a$anese firms#e(e# da!a from 1987 !o 199 !"e%

find !"a! obins ; increases mono!onica##% *i!" manageria# o*ners"i$ !"us

sugges!ing grea!er a#ignmen! of manageria# in!eres!s *i!" !"ose of s!oc"o#der *i!" !"e

increase in o*ners"i$5


• ,sing "e!eroscedas!ici!% robus! residua#s !o accoun! for non#ineari!% of insider

o*ners"i$ S"or! and =ease% 1999 re$or! a cubic form of re#a!ions"i$ be!*een

manageria# o*ners"i$ and firm $erformance for ,= com$anies due !o $ossib#e effec!s

of a#ignmen! <ensen and )ec#ing 197? con(ergence of in!eres! and en!renc"men!

)orc S"#eifer and /is"n% 1988 "ig" #e(e# of manageria# o*ners"i$5

2.4. !oreign Directors


10




'oreign irec!ors is be#ie(ed !o increase inde$endence of !"e board and bring more s$ecia#ised

no*#edge and e$erience im$ro(ing !"e cor$ora!e go(ernance s%s!em5 Go*e(er s!udies

be#o* s"o* mied findings on !"e re#a!ions"i$ of foreign direc!ors and $erformance5

Josi!i(e findings

• Pe#"eim and -and% 2003 s!ud% s"o* !"a! firms in Nor*a% and S*eden *i!"

foreign direc!ors "a(e "ig"er obins ;5


• B#ac e! a#5 200? $ro(ide e(idence !"a! for =orean firms !"e $resence of foreign

direc!or does no! $redic! "ig"er mare! (a#ue

2.4." Board Si#e

"e number of direc!ors on !"e board of direc!ors is assumed !o "a(e an inf#uence on

$erformance5 "e board is (es!ed *i!" res$onsibi#i!% for managing !"e firm and i!s ac!i(i!ies5

Go*e(er !"ere is no agreemen! o(er *"e!"er a #arge or sma## board does !"is be!!er5 Hermac

199? sugges!s !"a! !"e sma##er !"e board of direc!ors !"e be!!er !"e firms $erformance5

Hermac 199? fur!"er argued !"a! #arger boards are found !o be s#o* in decision maing5 "emoni!oring e$enses and $oor communica!ion in a #arger board "as a#so been seen as a reason

for !"e su$$or! of sma## board si>e +i$!on and +orsc" 1992O and <ensen 19935

Go*e(er !"ere is ano!"er sc"oo# of !"oug"! !"a! be#ie(es !"a! firms *i!" #arger board si>e "a(e

!"e abi#i!% !o $us" !"e managers !o $ursue #o*er cos!s of deb! and increase $erformance

nderson e! a#5 20045

I! s"ou#d be no!ed !"a! according !o sec!ion 30 of Insurance c! 200 @ no insurer shall have aboard of directors composed of less than + natural persons of which per cent shall be

independent directors, or such other number and percentage as may be approved by the .sc 5

Josi!i(e findings


11




• nderson e! a#5 2004 s"o* !"a! !"e cos! of deb! is #o*er for #arger boards $resumab#%

because credi!ors (ie* !"ese firms as "a(ing more effec!i(e moni!ors of !"eir financia#

accoun!ing $rocesses5

• Bro*n and Ca%#or 2004 add !o !"is #i!era!ure b% s"o*ing !"a! firms *i!" board si>es of

be!*een ? and 1 "a(e "ig"er re!urns on eui!% and "ig"er ne! $rofi! margins !"an do

firms *i!" o!"er board si>es5


• +imi!ing board si>e is be#ie(ed !o im$ro(e firm $erformance because !"e benefi!s of

#arger boards increased moni!oring are ou!*eig"ed b% !"e $oorer communica!ion and

decision maing of #arger grou$s +i$!on and +orsc" 1992O <ensen 19935

• Hermac 199? documen!s an in(erse re#a!ion be!*een board si>e and $rofi!abi#i!%

asse! u!i#i>a!ion and obins ;5

• Con%on and Jec 1998 a#so conc#ude !"a! !"e effec! of board si>e on cor$ora!e

$erformance re!urn on eui!% is genera##% nega!i(e5

2.4.$ Board and le%erage

I! ma% be argued !"a! #arge boards *i!" su$erior moni!oring abi#i!% $ursue "ig"er #e(erage !o

raise !"e (a#ue of !"e firm5 S"are"o#ders are re$resen!ed b% !"e Board of irec!ors and o!"er

s!ae"o#ders usua##% find *a%s !o con!ro# !"e ac!i(i!ies of managemen! !o ensure (a#ue

maimi>a!ion5

'inancia# ins!i!u!ions suc" as bans "a(e !"e si##s and o!"er resources !o con!ro# !"e ac!i(i!ies

of firms !"ereb% ser(ing as a usefu# !oo# for minimi>ing !"e $rinci$a#agen! conf#ic!5 'inancia#

ins!i!u!ions !ae a s$ecia# in!eres! in seeing !"a! !"e managemen! of firms *"ere !"e% "a(e

re#a!ions"i$ !ae measures !"a! *i## im$ro(e !"e $erformance of !"e firm5 'or eam$#e S"#eifer

and /is"n% 1997 found a "ig"er incidence of managemen! !urno(er in one of !"e de(e#o$ed

coun!ries in res$onse !o $oor firm $erformance5


12




2.4.& Insider Ownership

Insider o*ners"i$ refers !o direc!ors and managers o*ners"i$ of s"are"o#ding5 +ie manageria#

o*ners"i$ discussed abo(e direc!ors o*ners"i$ ma% be argued !o affec! !"e go(ernance

s%s!ems of com$anies5 Go*e(er e!an! #i!era!ure s"o* mied findings on !"e re#a!ions"i$ of insider o*ners"i$ and $erformance5

Josi!i(e findings

• gra*a# and =noeber 199? and Go 200 find grea!er insider o*ners"i$ !o be

$osi!i(e#% re#a!ed !o $erformance5 )orc e! a#5 1988 a#so find a $osi!i(e re#a!ions"i$

be!*een board o*ners"i$ and firm $erformance in !"e 0M o*ners"i$ range bu! a

nega!i(e re#a!ions"i$ be!*een 2M indica!ing as o*ners"i$ con(ergence of in!eres!and a $osi!i(e inf#uence of managemen! o*ners"i$ be%ond 2M #e(e#5

• )cConne## and Ser(aes 1990 re$or! a cur(i#inear re#a!ions"i$ be!*een obins ; and

!"e frac!ion of common s!oc o*ned b% cor$ora!e insiders5 Bu! un#ie )orc e! a#5

1988 s!ud% !"e cur(e in !"eir s!ud% s#o$es u$*ard un!i# insider o*ners"i$ reac"es

a$$roima!e#% 40M !o 0M and !"en s#o$es s#ig"!#% do*n*ard5


• Go#derness =ros>ner and S"ee"an 1999 re$or! a rise in manageria# o*ners"i$ from

13M in 193 !o 21M in 1995 In com$arison !o )orc e! a#5 1988 finding *i!" 1980

da!a !"e re#a!ions"i$ *i!" !"is 199 sam$#e *as *eaer5

• Bro*n and Ca%#or 2004 find no e(idence of $osi!i(e re#a!ions"i$ be!*een o$era!ing

$erformance or firm (a#ua!ion and ei!"er s!oc o$!ion e$ensing or direc!ors recei(ing

some or a## of !"eir fees in s"ares5

2.4.' Ownership Concentration

S!udies on cor$ora!e go(ernance "a(e iden!ified !*o basic cor$ora!e o*ners"i$ s!ruc!ures:

concen!ra!ed and dis$ersed5 In mos! de(e#o$ed economies !"e o*ners"i$ s!ruc!ure is "ig"#%


13




dis$ersed5 Go*e(er in de(e#o$ing coun!ries *"ere !"ere is a *ea #ega# s%s!em !o $ro!ec! !"e

in!eres!s of !"e in(es!ors !"e o*ners"i$ s!ruc!ure is "ig"#% concen!ra!ed5 ccording !o +a Jor!a

e! a#5 +a Jor!a e! a#5 1998 o*ners"i$ concen!ra!ion is a res$onse !o differing degrees of #ega#

$ro!ec!ion of minori!% s"are"o#ders across coun!ries5 "ig"#% concen!ra!ed o*ners"i$ s!ruc!ure

!ends !o crea!e more $ressure on managemen! !o engage in ac!i(i!ies !"a! maimise in(es!orson#%5 "e em$irica# #i!era!ure "as eamined !"e re#a!ions"i$ be!*een o*ners"i$ concen!ra!ion

and $erformance and !"e resu#!s are mied5 emse!> and +e"n 198 found no re#a!ions"i$

be!*een firm $erformance and o*ners"i$ concen!ra!ion5

Go*e(er o!"er s!udies suc" as )cConne## and Ser(eas 1990 found a $osi!i(e re#a!ions"i$

be!*een o*ners"i$ concen!ra!ion and firm (a#ue5

Josi!i(e findings

• Crosssec!iona# ana#%sis of Qruc 1989 indica!es !"a! !"e c"ange in firm (a#ue a! !"e

announcemen! of a $ri(a!e sa#e is s!rong#% corre#a!ed *i!" !"e resu#!ing c"ange in

o*ners"i$ concen!ra!ion af!er !"e sa#e and !"e $urc"asers curren! or an!ici$a!ed fu!ure

re#a!ions"i$ *i!" !"e firm5


• gra*a# and =noeber 199? find no significan! re#a!ions"i$ be!*een $erformance and

s!oc"o#dings of b#oc"o#ders5 Go#derness and S"ee"an 1988 argue !"a! !"e

freuenc% of cor$ora!econ!ro# !ransac!ions in(es!men! $o#icies accoun!ing re!urns and

obins ; are simi#ar for ma.ori!% o*ned and diffuse#% "e#d firms5

• Pn !"e o!"er "and crosssec!iona# ana#%sis of +e"mann and Qeigand 2000 indica!es

significan!#% nega!i(e im$ac! of o*ners"i$ concen!ra!ion on $rofi!abi#i!% as measured b%!"e re!urn on !o!a# asse!s *"ic" su$$or!s !"e (ie* !"a! #arge s"are"o#ders inf#ic! cos!s on

!"e firm5

2.4.1( !amil) ownership


14




'ami#% o*ners"i$ is a common fea!ure amongs! insurers in )auri!ius5 'ami#% o*ners"i$ is

argued !o affec! !"e go(ernance s%s!em of com$anies es$ecia##% in !"e nomina!ion of direc!ors5

gain e!en! #i!era!ure s"o* mied findings on !"e re#a!ions"i$ be!*een fami#% o*ners"i$ and

cor$ora!e go(ernance5

Josi!i(e findings

• )CConaugb% )a!""e*s and 'ia#o 2001 find !"a! fami#% con!ro##ed firms in merica

"a(e grea!er (a#ue o$era!e more efficien!#% carr% fe*er deb!s !"an o!"er firms


• S!udies #ie <acuemin and de 6"e##inc 1980 and Jro*se 1992 find no re#a!ions"i$

be!*een $erformance and fami#% o*ners"i$ in 'renc" and <a$anese firms5

2.4.11 Instit*tional in%estor ownership

Ins!i!u!iona# in(es!or o*ners"i$ "as an im$ac! on !"e go(ernance s%s!em and go(ernance

s!ruc!ure of com$anies5 I! affec!s direc!ors nomina!ion and gi(en !"eir s"are"o#ding $o*er in

some cases !"e% ma!eria##% affec! decision !aing in com$anies5 Some s!udies sugges! $osi!i(e

re#a!ions"i$ be!*een ins!i!u!iona# in(es!or o*ners"i$ and $erformance *"i#e o!"er s!udies find

no re#a!ions"i$ be!*een ins!i!u!iona# in(es!or o*ners"i$ and $erformance

Josi!i(e findings

• S"or! and =ease% 1997 s"o* !"a! in !"e absence of o!"er #arge e!erna# s"are"o#ders

ins!i!u!iona# in(es!ors "a(e a significan! $osi!i(e effec! on !"e firm $erformance5

)anagemen! !ends !o become en!renc"ed a! "ig"er #e(e#s of o*ners"i$ in !"e ,= since

!"e% do no! en.o% !"e same freedom as !"eir ,S coun!er$ar!s !o moun! !aeo(er defences and ins!i!u!iona# in(es!ors in !"e ,= are more #ie#% !o coordina!e !"eir

moni!oring ac!i(i!ies5

• Go 200 re$or!s !"a! significan! ins!i!u!iona# in(es!ors "o#dings raise board (igi#ance

*"ic" in !urn "as a $osi!i(e effec! on firm $erformance5


1




• +e"mann and Qeigand 2000 find $osi!i(e im$ac! of o*ners"i$ concen!ra!ion on

$rofi!abi#i!% for firms *i!" financia# ins!i!u!ions as #arges! s"are"o#ders *"ic" is

consis!en! *i!" !"e (ie* !"a! bans are be!!er more efficien! moni!ors !o #o*er !"e

agenc% cos!s5


• gra*a# and =noeber 199? find no significan! re#a!ions"i$ be!*een $erformance and

ins!i!u!iona# s!oc"o#ding

2.4.12 +a,eo%er control

Bric#e% and <ames 1987 and Sc"ran> 1993 argue !"a! inde$enden! direc!ors mig"! be

effec!i(e moni!oring mec"anism in case of res!ric!ed !aeo(ers as !"e $ro$or!ion of inde$enden!

direc!ors is nega!i(e#% corre#a!ed *i!" sa#ar% e$endi!ures or !aeo(ers mig"! be good con!ro#

mec"anism *"en !"ere are fe* inde$enden! direc!ors on !"e board5

Go*e(er gra*a# and =noeber 199? re$or! a nega!i(e re#a!ion be!*een grea!er cor$ora!e

con!ro# ac!i(i!% number of !aeo(ers *i!"in a firms indus!r% and $erformance *"i#e a s!ud%

b% 'rans and )a%er 199? sugges!s !"a! "os!i#e !aeo(ers do no! $erform a disci$#ining

func!ion in !"e ,= in 198 and 198? as "ig" board !urno(er does no! deri(e from $as!

manageria# fai#ure5

2.4.13 Other control mechanisms

P!"er con!ro# mec"anisms in res$ec! of !"e agenc% $rob#em be!*een s"are"o#ders and !"e

Board of irec!ors re#a!e !o #imi!ing CEP !enure in office Board assessmen!s and con!ro#s in

res$ec! of eb! financing5 "e re#a!ions"i$ be!*een !"ese moni!oring mec"anisms and

$erformance are a#so mied5 Some s"o* $osi!i(e re#a!ions"i$ *"i#e o!"ers find neu!ra# or nega!i(e re#a!ions"i$s5

Josi!i(e findings


1?




• S!ud% b% Go 200 s"o*s !"a! more deb! financing is $osi!i(e#% re#a!ed !o rigorous ris

assessmen! of !"e board and nega!i(e#% re#a!ed !o en(ironmen!a# $ro!ec!ion $o#ic%

com$e!i!i(e $o!en!ia# and a(erage $riceboo (a#ue ra!io for 199719995

• S!ud% b% '#oracis 200 re$or! !"a! deb!ma!uri!% s!ruc!ure is significan!#% re#a!ed !o

$erformance meaning !"a! deb!ma!uri!% can "e#$ a#ign in!eres!s of managers *i!" !"a!

of s"are"o#ders and !"erefore en"ance firm (a#ue5

Neu!ra# or Nega!i(e 'indings

• gra*a# and =noeber 199? find !"a! more deb! financing is nega!i(e#% re#a!ed !o

$erformance5 )oreo(er !"e% do no! find significan! re#a!ions"i$ be!*een $erformance

and eecu!i(e #abour mare! con!ro#5

2.4.14 Corporate go%ernance str*ct*re

"e cor$ora!e go(ernance s!ruc!ure suc" as o*ners"i$ s!ruc!ure board com$osi!ion board si>e

deb! and CEP dua#i!% "a(e a grea! inf#uence on $erformance5 ocumen!ar% e(idence sugges!s

!"a! !"e re#a!ions"i$ be!*een cor$ora!e go(ernance s!ruc!ure and firm $erformance can ei!"er be

$osi!i(e )orc e! a#5 1989 nega!i(e +e"man and Qeigand 2000 or neu!ra# /on "adden

and Bo#!on 19985

Josi!i(e findings

• Core Go#!"ausen and +arcer 1999 re$or! !"a! CEPs can earn grea!er com$ensa!ion

from firms *i!" *eaer go(ernance c"arac!eris!ics #ie CEP being !"e c"air of !"e

board #arge board si>e grea!er $ercen!age of ou!side direc!ors being a$$oin!ed b% !"e

CEP re#aed re!iremen! age for ou!side direc!ors and $resence of increasing $ro$or!ion

of ou!side direc!ors ser(ing !"ree or more o!"er boards Ga## and +iebman 1998 and

)ain Bruce and Buc 199? find !"a! *"en s!oc o$!ions are inc#uded a s!ronger $a%

$erformance #in can be iden!ified5

• gra*a# and Sam*ic 1999 re$or! !"a! eecu!i(es $a%$erformance sensi!i(i!% for

eecu!i(es a! firms *i!" !"e #eas! (o#a!i#e s!oc $rices is grea!er !"an !"a! a! firms *i!"

mos! (o#a!i#e s!oc $rices5


17




• Eamining !"e re#a!ion of manageria# re*ards and $ena#!ies !o firm $erformance in

<a$an !"e ,S and 6erman% =a$#an 1994a 1994b re$or!s !"a! $oor s!oc

$erformance and inabi#i!% !o genera!e $osi!i(e income increases !"e #ie#i"ood of !o$

managemen! !urno(er in !"ese coun!ries5

• In ano!"er s!ud% using !ime series da!a from !"e ,= and 6erman% Con%on and

Sc"*a#bac 2000 re$or! a significan! $osi!i(e associa!ion be!*een cas" $a% and

com$an% $erformance in bo!" coun!ries5


• ,sing $ane# da!a on #arge $ub#ic#% !raded ,= com$anies ga!"ered be!*een 1991 and

1994 Con%on and Jec 1998a documen! !"a! board moni!oring measured in !erms of

!"e $ro$or!ion of noneecu!i(e direc!ors on a board and !"e $resence of remunera!ion

commi!!ees and CEP dua#i!% do "a(e on#% a #imi!ed effec! on !"e #e(e# of !o$

managemen! $a%5

• n ana#%sis of 199 of !"e imes o$ 1000 #is!ed firms b% E>>ame# and Qa!son 1997

confirms !"a! c"anges in eecu!i(e $a% are more c#ose#% re#a!ed !o e!erna# mare!

com$arison of $a% #e(e#s !"an !o c"anges in ei!"er $rofi! or s"are"o#der *ea#!"5 CoreGo#!"ausen and +arcer 1999 re$or! !"a! ecess CEP com$ensa!ion "as a significan!

nega!i(e associa!ion *i!" subseuen! firm o$era!ing $erformance as *e## as s!oc

re!urns5 Simi#ar nega!i(e re#a!ions"i$ be!*een ecess direc!or com$ensa!ion and firm

$erformance is re$or!ed b% Bric Ja#mon and Qa#d 200?5 -ecen!#% uff"ues and

=abir 2008 ues!ions abou! !"e con(en!iona# *isdom of using eecu!i(e $a% !o a#ign

managers in!eres! *i!" !"ose of s"are"o#ders af!er finding no s%s!ema!ic e(idence !"a!

eecu!i(e $a% of u!c" firms is $osi!i(e#% re#a!ed !o cor$ora!e $erformance5

2.4.1 Social -esponsiilit) and Corporate /o%ernance

In!erna!iona##% !"e focus of a com$an% and i!s socie!a# ro#e is *idening5 "e !rend is for

com$anies !o formu#a!e ob.ec!i(es of a nonfinancia# na!ure !o*ards !"e ac"ie(emen! of


18




ba#anced economic socia# and en(ironmen!a# $erformance5 )an% s!udies "a(e focused on !"e

re#a!ions"i$ of socia# res$onsibi#i!% of !"e firm and $erformance5

Josi!i(e findings

• /ersc"oor 1998 and Go 200 argue !"a! com$anies commi!!ed !o e!"ica# be"a(iour

"a(e "ig"er o(era## financia# $erformance !"an !"ose *i!"ou! suc" e$#ici! under!aings


• S!ud% b% Coffe% and Qang 1998 s"o*s !"a! manageria# con!ro# *i!" more eecu!i(e

direc!ors !end !o be more su$$or!i(e of cor$ora!e $"i#an!"ro$ic be"a(iours !"an broad

di(ersi!% of "a(ing more inde$enden! noneecu!i(e direc!ors5

2.4.1" Competiti%e or Collaorati%e oard politics

Simmers 1998 finds !"a! ua#i!% s$eed of board s!ra!egic decision $rocess and !"e ou!comes

are s!rong#% re#a!ed !o co##abora!i(e $o#i!ics bu! goa# ac"ie(emen! and unres!ric!ed funds are

*ea#% associa!ed *i!" co##abora!i(e $o#i!ics and Pgden and Qa!son 1999 re$or! considerab#e

im$ro(emen! in !"e cus!omer ser(ice and "ig"er resu#!ing s"are"o#der re!urns since

$ri(a!i>a!ion of ,= *a!er su$$#% indus!r% in 19895

Pn !"e con!rar% Qa"a# 1994 ana#%ses 9 ac!i(is! funds o(er a 9 %ear $eriod and !"eir "o#dings

in differen! com$anies and finds no e(idence of #ong !erm s!oc $rice $erformance

im$ro(emen! of !arge!ed firms5 Besides $erformance con!inues !o dec#ine e(en !"ree %ears af!er

!arge!ing5

2.4.1$ Internationalisation

Sanders and Car$en!ers 1998 sur(e% of a sam$#e of #arge ,S firms sugges! !"a! !"e $ro$or!ion

of inde$enden! direc!ors on !"e board is $osi!i(e#% associa!ed *i!" !"e degree of

in!erna!iona#i>a!ion5 Simi#ar finding is a#so re$or!ed b% Go 2005


19




2.4.1& Compliance with Code

,sing a sam$#e of big 6erman #is!ed cor$ora!ions 6onc"aro( Qerner and Limmermann 200?

conc#ude !"a! !"e firms *i!" e!ended com$#iance *i!" !"e Code are $riced *i!" a $remium of

3523 E,- on a(erage and !"e s!oc $erformance of !"e firms *i!" "ig"er com$#iance is 10 $ercen!age $oin!s "ig"er5

I! s"ou#d be no!ed !"a! a## insurance com$anies in )auri!ius "a(e !o com$#% *i!" !"e Code of

Cor$ora!e 6o(ernance es!ab#is"ed b% !"e Na!iona# Commi!!ee on Cor$ora!e 6o(ernance5

&!5 I"S%RA"CE B%SI"ESS A"$ C#RP#RATE G#'ER"A"CE

S!rong go(ernance in !"e insurance sec!or reuires !*o #ines of defence5 "e firs! #ine of

defence consis!s of !"e in!erna# organs of !"e com$an% !"a! is i!s managemen! !"e s%s!ems of

ris managemen! in!erna# audi! and in!erna# con!ro#s !"e com$an%s ac!uar% and !"e Board !"a!

s"ou#d "a(e o(ersig"! of !"em a##5 E!erna# measures $ro(ide !"e second #ine of defence5 "ese

co(er bo!" !"e su$er(ising au!"ori!% !"a! o(ersees !"e insurance com$anies and mare!

mec"anisms !"a! moni!or and inf#uence !"e sec!or5 Bo!" #ines of defence are needed !o ensure a

"ig" #e(e# of !rans$arenc% and accoun!abi#i!% in !"e sec!or5 'ur!"ermore !"e burden on !"e

su$er(isor% au!"ori!% is significan!#% reduced if !"e com$anies in!erna# go(ernance

arrangemen!s are s!rong or *"ere !"e mare! $ro(ides an effec!i(e form of disci$#ine !"roug"

en"anced #e(e#s of !rans$arenc%5

&!6 C#RP#RATE G#'ER"A"CE FRAME(#R4 F#R I"S%RERS I" MA%RITI%S

"e Insurance Indus!r% in )auri!ius is regu#a!ed b% !"e 'inancia# Ser(ices Commission5 "e

'SC #icenses under !"e Insurance c! 200 insurancereinsurance com$anies as *e## as

insurance ser(ice $ro(iders Insurance Broer Insurance gen! com$an% indi(idua#

Insurance )anager Insurance Sa#es$erson and C#aims Jrofessiona# !o conduc! insurance

business ac!i(i!ies5

"e Insurance c! 200 adminis!ered b% !"e 'SC is a#igned *i!" !"e In!erna!iona# ssocia!ion

of Insurance Su$er(isors IIS s!andards and $rinci$#es and focuses on s$ecific regu#a!or%


20




issues re#a!ing !o ca$i!a# adeuac% so#(enc% cor$ora!e go(ernance ear#% *arning s%s!ems and

!"e $ro!ec!ion of $o#ic%"o#ders5

Pn 22 <u#% 200 !"e 'SC issued a circu#ar C+01070 reuiring a## i!s #icensees !o com$#%

*i!" $ro(isions of !"e Na!iona# Code of Cor$ora!e 6o(ernance *"ic" #a%s ou! !"e minimumcri!eria e$ec!ed from i!s #icensees concerning good cor$ora!e go(ernance5 I! is manda!or% for

#icensees of !"e 'SC inc#uding insurers !o ensure fu## com$#iance *i!" $ro(isions of !"e Code5

"e Code on Cor$ora!e 6o(ernance a$$#ies !o a## com$anies #is!ed on !"e S!oc Ec"ange of

)auri!ius SE) Bans and NonBaning 'inancia# Ins!i!u!ions amongs! o!"ers5 "e irec!ors

of !"ese com$anies "a(e !o re$or! in !"e nnua# -e$or! *"e!"er !"e Code of Cor$ora!e

6o(ernance "as been ad"ered !o or if no! F !o gi(e reasons *"ere !"ere "as no! been

com$#iance and *"ere a$$#icab#e s!a!e !"e a#!erna!i(e $rac!ice ado$!ed5 ddi!iona##% !"eres"ou#d be a cor$ora!e go(ernance sec!ion in !"e nnua# -e$or! *"ere !"e com$an% s"ou#d

disc#ose informa!ion on: s"are"o#ders di(idend $o#ic% direc!or senior managemen! re#a!ed

$ar!% !ransac!ions dea#ing in s"ares s"are"o#ders agreemen! remunera!ion $er direc!or !erms

of reference of board commi!!ees s"are o$!ion $#ans and $o#icies and $rac!ices5 "e Board of

!"e com$anies is res$onsib#e for !"e im$#emen!a!ion and com$#iance *i!" !"e Code on

Cor$ora!e 6o(ernance5

0 $ATA A"$ RESEARC) MET)#$#1#G*

0! I"TR#$%CTI#"

"e re#a!ions"i$ be!*een cor$ora!e go(ernance and $erformance "as been eamined in e!an!

#i!era!ure as e$anded abo(e in sec!ion 2O using main#% uan!i!a!i(e informa!ion deri(ed from

annua# re$or!s or o!"er $ub#is"ed financia# s!a!emen!s of com$anies !"us a#*a%s %ie#ding mied

findings5 Some re$or! $osi!i(e re#a!ions"i$s *"i#e o!"ers re$or! neu!ra# of nega!i(e

re#a!ions"i$s5 S!udies focus on !"e uan!i!a!i(e re#a!ions"i$ be!*een cor$ora!e go(ernance and $erformance *"ic" occu#! !"e fac! !"a! an im$ro(ed Cor$ora!e 6o(ernance frame*or s"ou#d

!"eore!ica##% %ie#d be!!er be"a(iours ac!ions from !"ose res$onsib#e of go(ernance in a

com$an%5 "is ua#i!a!i(e as$ec! in res$ec! of !"e con!ribu!ion of cor$ora!e go(ernance !o

$erformance is no! usua##% considered *"en es!ab#is"ing a re#a!ions"i$ be!*een cor$ora!e

go(ernance and $erformance5


21




"erefore !"e need for ua#i!a!i(e informa!ion !o su$$#emen! !"e uan!i!a!i(e ana#%sis is

$rominen!#% fe#!5 o fi## !"is ga$ !"is s!ud% ado$!s a 3 $"ase $rocess:

J"ase 1: o es!ab#is" *"e!"er !"ere is a re#a!ions"i$ be!*een cor$ora!e go(ernance and $erformance a regression mode# is bui#!5 obins ; is used as de$enden! (ariab#e

and a cor$ora!e go(ernance frame*or using a!!ribu!es iden!ified in #i!era!ure as

inde$enden! (ariab#es5 Informa!ion abou! !"e inde$enden! (ariab#es is deri(ed from

!"e annua# re$or!s of eac" insurer5

J"ase 2: I! is argued !"a! a good cor$ora!e go(ernance frame*or %ie#ds be!!er

ac!ionsbe"a(iours from direc!ors5 Go*e(er !"is argumen! canno! be !es!ed b%

informa!ion deri(ed from annua# re$or!s Don $a$er5 "erefore !o es!ab#is" *"e!"er !"ere is a fac!ua# re#a!ions"i$ be!*een cor$ora!e go(ernance and $erformance a

Cor$ora!e 6o(ernance c!ion Inde is cons!ruc!ed using informa!ion ga!"ered

!"roug" a sur(e% conduc!ed on a## insurance com$anies5

J"ase 3: "e Cor$ora!e 6o(ernance c!ion Inde of eac" insurer is regressed agains! obins

; !o es!ab#is" *"e!"er !"ere is a rea# #in be!*een cor$ora!e go(ernance and

$erformance in !"e insurance indus!r% of )auri!ius5

0! R EGRESSI#" M#$E1 / C#RP#RATE G#'ER"A"CE A"$ PERF#RMA"CE

Ini!ia##% using simi#ar me!"odo#ogies as in (arious $rior s!udies refer !o $$endi 2

eamining !"e re#a!ions"i$ be!*een Cor$ora!e 6o(ernance and firm $erformance a regression

mode# is bui#! using a!!ribu!es of cor$ora!e go(ernance as iden!ified in #i!era!ure as inde$enden!

(ariab#es and obins ; as de$enden! (ariab#e5

3.1.1 Dependent %ariale 0 +oins

obinKs ; @;A *as de(e#o$ed b% <ames obin in 19?9 as !"e ra!io be!*een !"e mare! (a#ue

and re$#acemen! (a#ue of !"e same $"%sica# asse!5 ; $#a%s an im$or!an! ro#e in man% financia#

in!erac!ions5 I! "as been em$#o%ed !o e$#ain a number of di(erse cor$ora!e $"enomena suc" as

crosssec!iona# differences in in(es!men! and di(ersifica!ion decisions <ose Nic"o#s and<u#% 23 2013Cambridge ,=

22




S!e(ens 198? and )a#ie# /on 'urs!enberg and Qa!son 1979 !"e re#a!ions"i$ be!*een

manageria# eui!% o*ners"i$ and firm (a#ue )cConne## and Ser(aes 1990 and )orc

S"#eifer and /is"n% 1988 !"e re#a!ions"i$ be!*een manageria# $erformance and !ender offer

gains +ang S!u#> and Qa##ing 1989 and financing di(idend and com$ensa!ion $o#icies

Smi!" and Qa!!s 19925

Go*e(er des$i!e i!s inf#uence and ana#%!ica# $o*er ; is rare#% used in rea#*or#d decision

maing because of manageria# unfami#iari!% and !"e una(ai#abi#i!% of accura!e and !ime#% da!a5

'or financia# ana#%s!s desiring ; da!a !"e% "a(e !o $erform !"e +indenberg and -oss 1981 and

+and and +i!>enberger 1989 $rocedures5 Bu! !"ese $rocedures are so com$#e and

cumbersome !"a! i! is "ig"#% un#ie#% !"a! e(en !"e mos! dedica!ed ana#%s! *ou#d e(er a!!em$!

!o under!ae !"em5

"erefore gi(en !"e aforemen!ioned $o!en!ia# of ; in !"e ana#%sis of a number of im$or!an!

cor$ora!e $"enomena e$#ana!ions in !"is s!ud% !"e Sim$#e $$roima!ion of obins ;

de(e#o$ed b% =ee G C"ung and S!e$"en Q Jrui!! 1994 is used as !"e de$enden! (ariab#e in

!"is s!ud% and is modified !o fi! da!a and informa!ion a(ai#ab#e from insurance com$anies

financia# s!a!emen!s5 "e sim$#e a$$roima!ion of ; is defined as !"e mare! (a#ue of eui!%

$#us !"e boo (a#ue of deb! di(ided b% !"e boo (a#ue of !o!a# asse!s5 I! s"ou#d be no!ed !"a! ; is

used for !"is s!ud% ins!ead of an% o!"er $erformance measure e5g5 -e!urn on sse!s as used in

o!"er $rior s!udies $$endi 2 because ; is a cumu#a!i(e measure of $erformance *"ic" ismos! a$$ro$ria!e for Insurance Com$anies because for an insurance com$an% $rofi!abi#i!% is

im$or!an! bu! !"e mos! im$or!an! and crucia# fac!or for i!s sur(i(a# is !o mee! Ca$i!a# deuac%

-euiremen!s and !"e ongoing so#(enc% reuiremen!s5

"erefore for !"e $ur$ose of !"is s!ud% !"e sim$#e a$$roima!ion of ; is modified because:

a )os! insurance com$anies are no! #is!ed !"erefore !o ob!ain !"e Ne! sse! /a#ue N/

of eac" insurer *ou#d be a cumbersome eercise5

b In addi!ion a## insurers "a(e !o $re$are financia# s!a!emen!s according !o In!erna!iona#

'inancia# -e$or!ing S!andards *"ic" ad(oca!es !"e use of fair (a#ua!ion of asse!s and

#iabi#i!ies5


23




c n insurer according !o Insurance c! 200 s"a## no! *i!"ou! !"e a$$ro(a# of !"e 'SC

gi(en genera##% or in a $ar!icu#ar case mor!gage c"arge or o!"er*ise encumber i!s

asse!s direc!#% or indirec!#% borro* an% asse! or b% means of an% sure!% gi(e an%

securi!% in re#a!ion !o ob#iga!ions be!*een o!"er $ersons ece$! *"ere !"e securi!% is

$ro(ided under a guaran!ee $o#ic% *"ic" !"e insurer is au!"orised !o issue under i!s#icence5

"erefore for !"e reasons abo(e:

a I! is assumed !"a! !"e (a#ue of eui!% as disc#osed in !"e financia# s!a!emen!s ref#ec!s !"e

)are! /a#ue of Eui!%5

b Since insurers "a(e no #ong !erm #iabi#i!ies in !"e form of #oans in !"eir financia#s!a!emen!s in com$#iance *i!" !"e Insurance c! 200 gi(en !"e na!ure of insurance

ac!i(i!% i! ma% be argued !"a! !"e res$ec!i(e insurance funds of !"e insurer ma% be

considered as deb!s of !"e insurer !o*ards i!s $o#ic%"o#ders5

; in !"e con!e! of !"is s!ud% is ca#cu#a!ed as:

7 8

Genera-

Insurance

S"are ca$i!a# T 6I 'undT PC- 'und T S"or! !erm #iabi#i!ies

o!a# sse!s1on9 Term

Insurance

S"are ca$i!a# T + 'und T S"or! !erm #iabi#i!ies

o!a# sse!s

3.1.2 Independent ariales and their Meas*rement

"e c"oice of !"e cor$ora!e go(ernance frame*or is based on re(ie* of e!an! #i!era!ure5 In

addi!ion in se#ec!ing !"e inde$enden! (ariab#es reference is made !o recen! $rior s!udies refer !o

$$endi 2

"e Cor$ora!e go(ernance frame*or is se#ec!ed a#so on !"e basis !"a! eac" inde$enden!

(ariab#e s!reng!"ens !"e o(era## cor$ora!e go(ernance frame*or of !"e Com$an%5 'or eam$#e

i! is assumed !"a! more inde$enden! direc!ors *i## bring more inde$endence !o !"e board more

non eecu!i(e *i## s!reng!"en inde$endence5 "e $ro$or!ion of eecu!i(e direc!ors s!reng!"ens


24




Board si>e and increases effec!i(eness of !"e board5 )ore board mee!ing signifies more

direc!ors in!erac!ions and discussions s!reng!"ening accoun!abi#i!% and maing !"e board more

coo$era!i(e and re#iab#e5 )ore subcommi!!ees indica!e more de#ega!ion of board res$onsibi#i!%

maing !"e *"o#e board more effec!i(e and re#iab#e5

Inde$enden! (ariab#es are co##ec!ed from !"e Cor$ora!e 6o(ernance disc#osure sec!ion from !"e

nnua# -e$or!s of eac" insurer5

"e inde$enden! (ariab#es and !"eir measuremen! are in ab#e 8 be#o*

Ta-e ;: Independent 'aria-e and their measurement

< Independent 'aria-e Measurement1 Insider Jro$or!ion of Eecu!i(e irec!ors !o !o!a# irec!ors on !"e Board

2 NonEecu!i(e +N Number of Non Eecu!i(e irec!ors

3 Inde$endence Jro$or!ion of Inde$enden! irec!ors !o !o!a# irec!ors on !"e Board

4 Board Si>e +N o!a# Number of irec!ors

)ee!ing +N Number of board mee!ings

? )ee!ing !!endance (erage a!!endance of irec!ors in Board )ee!ings

7 Subcommi!!ees +N Number of subcommi!!ee es!ab#is"ed b% Board

8 Subcommi!!ees )ee!ing +N Number of board Subcommi!!ees mee!ings

9 Subcommi!!ee !!endance (erage a!!endance of irec!ors in Subcommi!!ee )ee!ings

10 Si>e Con!ro# /ariab#e +N o!a# sse!s11 ge Con!ro# /ariab#e ifference be!*een !"e obser(a!ion %ear and !"e %ear in *"ic" !"e

insurer *as #icensed5

12 6ro*!"Con!ro# /ariab#e (erage annua# gross $remium gro*!"

3.1.3 -egression Model

Jerf U V0 T V1 INS T V2 Nonee T V3 Ind T V4 Si> T V mee T V? meea! T V7

Subcom T V8 Subcommee T V9 Subcomeea! T V10 CoSi> T V11 Coge T V12

Co6r* T W

Q"ere:• Jerf U Jerformance• Ins U Eecu!i(e direc!ors• Nonee U Noneecu!i(e direc!ors• Ind U Board Inde$endence• Si> U Board Si>e


2




• mee U Board )ee!ings• meea! U Board )ee!ing !!endance• Subcom U Subcommi!!ees• Subcommee U Subcommi!!ees )ee!ing• Subcommea! U Subcommi!!ees )ee!ing !!endance

• CoSi> U Com$an% Si>e• Coge U Com$an% ge• Co6r* U Com$an% 6ro*!"• WU error !erm

0!& C#RP#RATE G#'ER"A"CE ACTI#" I"$E=

3.2.1 S*r%e)

I! is argued !"a! a good cor$ora!e go(ernance frame*or %ie#ds be!!er ac!ionsbe"a(iours from

direc!ors5 "erefore on !"is assum$!ion a Cor$ora!e 6o(ernance c!ion Inde is cons!ruc!ed

using informa!ion ga!"ered during a sur(e% conduc!ed on a## insurance com$anies5

ues!ionnaire is circu#a!ed !o a## insurers5 6i(en !"e na!ure and com$#ei!% of issues in(o#(ed in

!"e ues!ionnaire *"ere ues!ions re#a!e !o !"e core as$ec! of managemen! of an insurance

com$an% i!s go(ernance one ues!ionnaire *as circu#a!ed !o eac" insurance com$an%5 "e

ues!ionnaire *as reuired !o be fi##ed b% ei!"er !"e C"ief Eecu!i(e officer or irec!or or

Com$#iance manager or 'inance manager or Guman -esource )anager or an% Senior )anager

"a(ing direc! in(o#(emen! in !"e managemen! and access !o !"e Board of direc!ors of !"e

insurance com$an% for a! #eas! !"e #as! 4 %ears5

"e ues!ionnaire co##ec!s !"e res$onden!s #e(e# of agreemen! !o ac!ionorien!ed be"a(ioura#

s!a!emen!s concerning !"e board of direc!ors of i!s com$an%5 ## ues!ions $oin! !o !"e same

direc!ion on a #ier! sca#e of 1 !o 7 *"ere 1 is !o!a# disagreemen! and 7 !o!a# agreemen!s5 Based

on !"e resu#!s !"erefore an inde ma% be cons!ruc!ed5 !!ribu!es of !"e Cor$ora!e 6o(ernance

c!ion Inde are $resen!ed in !ab#e 9 be#o*:

Ta-e >: Attriutes of Board Actions ? Behaviours

Attriutes of Board

Actions?Behaviours1eadin9 statement in the @uestionnaire

Inde$endenceBoard inc#udes inde$enden! noneecu!i(e direc!ors *"o "a(e nodirec! re#a!ions"i$s *i!" !"e com$an%5


2?




ccoun!ab#eBoard ensures !"a! )anagemen! ac!s in !"e in!eres!s of !"es"are"o#ders and is co##ec!i(e#% ans*erab#e !o !"e s"are"o#ders for managemen!s ac!ions5

rans$aren! Board ensures !"a! sa!isfac!or% communica!ion !aes $#ace *i!"s"are"o#ders and is based on a mu!ua# unders!anding of needsob.ec!i(es and concerns5

-es$onsib#eBoard $ro(ides sui!ab#e o(ersig"! of ris managemen! and main!ainsa sound s%s!em of ris measuremen! and con!ro#5

i#igen! and e!"ica# be"a(iour

irec!ors main!ain good s!andards of business conduc! in!egri!% ande!"ica# be"a(iour and o$era!e *i!" due care and di#igence and a! a##!imes ac! "ones!#% and o$en#%5

Effec!i(eCom$an% is "eaded b% an effec!i(e board of direc!ors *"ic" isres$onsib#e for go(ernance.

Coo$era!i(e andre#iab#e

Board *ors as a coo$era!i(e and re#iab#e !eam in !"e in!eres! of a##s"are"o#ders and o!"er s!ae"o#ders

'air Board ensures !"a! em$#o%ees are fair#% !rea!ed and a$$ro$ria!e#%

remunera!ed

o con!ro# !"e Cor$ora!e 6o(ernance c!ion Inde !"e cor$ora!e go(ernance frame*or used

in !"e regression mode# in $aragra$" 35153 is #ined !o !"e a!!ribu!es of !"e cor$ora!e go(ernance

ac!ion inde as fo##o*s:

CP-JP-E 6P/E-NNCE '-)EQP-=

BP- CIPNS

BEG/IP,-S


27

Appropriate number of ExecutiveDirectors

Appropriate number Non-Executive

Directors

Appropriate number of independent

Directors

Appropriate Board Size

Growing compan

Appropriate number of board

meetings

A!! directors attending a!! board

meetings

Appropriate number of committeemeetings

A!! directors attending a!! committee

meetings

Appropriate compan size

Estab!is"ed compan

Appropriate number of

subcommittees

#NDE$ENDEN%

A&&'(N%AB)E

%*ANS$A*EN%

*ES$'NS#B)E

D#)#GEN% AND E%+#&A)

E,,E&%#E

&''$E*A%#E AND

*E)#AB)E

,A#*




0!0 R EGRESSI#" M#$E1 + CGA I"$E= A"$ PERF#RMA"CE

o eamine !"e re#a!ions"i$ be!*een cor$ora!e go(ernance and $erformance a regressionmode# is bui#! using !"e inde$enden! (ariab#e as $er !ab#e 10 be#o* and obins ; as de$enden!

(ariab#e

Ta-e .: Independent 'aria-es and their measurement

Independent varia-es Measurement

Inde$endence Inde$endence C6 Inde

ccoun!abi#i!% ccoun!abi#i!% C6 Inde

rans$arenc% rans$arenc% C6 Inde

-es$onsibi#i!% -es$onsibi#i!% C6 Inde

i#igen! and E!"ica# Be"a(iour i#igen! and E!"ica# Be"a(iour C6 Inde

Effec!i(eness Effec!i(eness C6 Inde

Coo$era!i(e and -e#iab#e Coo$era!i(e and re#iab#e C6 Inde


28




'airness 'airness C6 Inde

-egression mode#:

Jerf U V0 T V1 Inde T V2 cc T V3 rans T V4 -es$ T V eBe T V? Effe T V7

CP-e T V8 'air T W

Q"ere:• Jerf U Jerformance measured in !erms of ;• Inde U Inde$endence C6 Inde• cc U ccoun!abi#i!% C6 Inde• rans U rans$arenc% C6 Inde• -es$ U -es$onsibi#i!% C6 Inde• ebe U i#igen! and E!"ica# Be"a(iour C6 Inde• Effe U Effec!i(eness C6 Inde• CP-e U Coo$era!i(e and re#iab#e C6 Inde• 'air U 'airness C6 Inde• WU error !erm


29




2! A"A1*SIS A"$ FI"$I"GS

"e findings and ana#%sis of !"e mode#s de(e#o$ed in !"is s!ud% in #ine *i!" !"e me!"odo#og%

e$#ained in sec!ion 3 abo(e are $resen!ed be#o*5 a!a for ; and inde$enden! (ariab#es *ere

co##ec!ed for !"e %ears 2009 2010 and 2011 from !"e annua# financia# s!a!emen!s of eac"

insurer measured and fed in SJSS5 mu#!i$#e regression mode# is used as in (arious $rior

s!udies $$endi 25 "e genera# $ur$ose of mu#!i$#e regressions !"e !erm firs! used b%

Jearson in 1908 is !o #earn more abou! !"e re#a!ions"i$ be!*een se(era# inde$enden! or

$redic!or (ariab#es and a de$enden! or cri!erion (ariab#e5

2! R EGRESSI#" M#$E1 / C#RP#RATE G#'ER"A"CE A"$ PERF#RMA"CE

s e$#ained in !"e me!"odo#og% $"ase 1 of !"is s!ud% eamines *"e!"er !"ere is a #in

be!*een !"e cor$ora!e go(ernance frame*or inde$enden! (ariab#es and $erformance ; F

de$enden! (ariab#e using informa!ion co##ec!ed from annua# re$or!s of eac" insurer Don $a$er5

Jerf U V0 T V1 INS T V2 Nonee T V3 Ind T V4 Si> T V mee T V? meea! T V7

Subcom T V8 Subcommee T V9 Subcomeea! T V10 CoSi> T V11 Coge T V12

Co6r* T W

Q"ere:•

Jerf U Jerformance• Ins U Eecu!i(e direc!ors• Nonee U Noneecu!i(e direc!ors• Ind U Board Inde$endence• Si> U Board Si>e• mee U Board )ee!ings• meea! U Board )ee!ing !!endance• Subcom U Subcommi!!ees• Subcommee U Subcommi!!ees )ee!ing• Subcommea! U Subcommi!!ees )ee!ing !!endance• CoSi> U Com$an% Si>e• Coge U Com$an% ge• Co6r* U Com$an% 6ro*!"• WU error !erm

4.1.1 Model s*mmar) and 5O


30




'rom !"e )ode# Summar% *e obser(e !"a! !"e coefficien! of mu#!i$#e de!ermina!ions is 0593

i5e5 abou! ?0M of !"e (aria!ion in $erformance is e$#ained b% !"e inde$enden! (ariab#es5 "e

regression eua!ion a$$ears !o be (er% usefu# since !"e $redic!i(e ca$aci!% of !"e mode# is a!

abou! 20M5

Pn !"e NP/ !ab#e i! is obser(ed !"a! J (a#ue X050 !"erefore a! 9M confidence #e(e# !"ere

eis!s enoug" e(idence !o conc#ude !"a! a! #eas! one of !"e inde$enden! (ariab#es is usefu# for

$redic!ing insurance $erformance as measured b% ;O !"erefore !"e mode# is usefu#5

I! ma% be conc#uded !"a! !"ere eis!s a re#a!ions"i$ be!*een cor$ora!e go(ernance and

$erformance in !"e Insurance Indus!r% of )auri!ius5 o ana#%se !"is re#a!ions"i$ !"e

corre#a!ions coefficien!s need !o be obser(ed:

Coefficientsa

Model

UnstandardizedCoefficients

StandardizedCoefficients

t Sig.

CorrelationsCollinearityStatistics

BStd.Error Beta

Zero-order Partial Part Tolerance VIF

1 (Constant -.1!" .#$! -.%"" .&'

Insider -.'% .!$ -.%) -.'$# .$!& -.1!' -.#" -.#' .)# 1.""

*on-E+ec,tie .'1 .11! .'!$ 1.$1 .") .1!$ .'#! .1"! .%$% '.1"

Board Inde/endence -.1%% .! -.#1) -1.!1 .$& -.#% -.')# -.'1 .%%$ '.'#$

Board Size .#'! .1! .%'1 1.!'# .$) -.#% .')% .'1' .')# #.")&

Board Meeting -.") .&& -.''% -1.%%! .1)% -.1!$ -.') -.1&! .)&) 1.$$1

Board Meeting 0ttendance .)1 .'' .)) '.)'& .1) .#&) .#%# .'"% .##! '.")!

*,2er of S,2coittees .1" .1! .## .1$& .!&1 .##' .') .' .#!# '.&1%

*,2er of S,2coittees

Meetings

-.! .&1 -.'# -1.#" .1"$ .'& -.1!& -.1)' .)&# 1.$$&

0erage S,2coittee

Meetings 0ttendance

.%) .%% .')! 1.1" .#1# .')' .1%& .11! .'11 %.$%!

Co/any Size .'$ .1$ .'$' 1.)"# .11! .1" .''% .1!) .%&) '.1)1

Co/any 0ge -.') .# -.1#1 -.!'1 .%1& .%" -.11! -.") .)#1 1.!!%

Co/any 3ro4t5 .&& .1&" .) .#!! .$ -.%' .)& .%) .!1# 1.'#

a. 6e/endent Varia2le7 To2ins 8


31




I! is obser(ed !"a! no! a## inde$enden! (ariab#es are ac!ua##% significan!#% corre#a!ed !o ;5 ! 1M

M and 10M significance #e(e# i! a$$ears !"a! some of !"e $redic!or (ariab#es can be remo(ed

from !"e fu## mode# as unnecessar%5

G%$o!"esis: Cri!eria:G0: /ariab#e is no! usefu# If $ Y 0501 050 and 0510 acce$! G0

G1: /ariab#e is usefu# If $ X 0501 050 and 0510 re.ec! G0

I! is obser(ed !"a! !"e "%$o!"esis is su$$or!ed for NonEecu!i(e Board Inde$endence Board

Si>e and Board )ee!ing !!endance and !o some degree Com$an% Si>e 11M5 I! is "o*e(er

in!eres!ing !o no!e !"a! Board Inde$endence measured in !erms of !"e $ro$or!ion of inde$enden!

direc!ors !o !o!a# number of direc!ors and Board si>e measured in !erms of !"e Na!ura#

+ogari!"m of !"e !o!a# number of direc!ors is nega!i(e#% corre#a!ed !o $erformance5 'ur!"er !"ecorre#a!ion be!*een noneecu!i(e direc!ors and ; is significan!#% "ig"er in !erms of B5

! !"e ou!se! i! is !o be no!ed !"a! man% insurance com$anies es$ecia##% in %ears 2009 and

2010 *ere no! com$#%ing *i!" !"e reuiremen! of !"e Insurance c! 200 i5e5 "a(ing !"e

reuired number of inde$enden! direc!ors a! #eas! 25 )an% did no! "a(e an% inde$enden!

direc!ors on !"eir board of direc!ors *"ic" e$#ains $ar!#% !"e nega!i(e corre#a!ion5 "is ma% be

e$#ained as !"e %ears 2009 and 2010 *ere in !"e !ransi!iona# $eriod for im$#emen!a!ion of

reuiremen!s of !"e Insurance c! 200 !ransi!iona# $eriod *"ic" ended b% 31 ecember 2010and man% com$anies *ere maing im$#emen!a!ion arrangemen!s5

o e$#ain fur!"er !"is nega!i(e corre#a!ion !ab#e 11 be#o* $ro(ides !"e a(erage %ear 2009 F

2011 of direc!ors"i$5 I! is obser(ed !"a! !"ere are on a(erage more noneecu!i(e direc!ors !"a!

inde$enden! direc!ors on !"e BP5 "is means !"a! noneecu!i(e direc!ors are $robab#% fi##ing

!"e ro#es of inde$enden! direc!ors and !"us dri(ing $erformance ra!"er !"an !"e con!rar% *"ic"

e$#ains !"e nega!i(e corre#a!ion and !"e significance of noneecu!i(e direc!ors5


32

Ta-e + $irectorship &..> +&.




I! is no!ed !"a! Board Si>e is a#so nega!i(e#% corre#a!ed !o $erformance i5e5 !"e #arger !"e board

!"e #ess $erforming !"e com$an%5 "roug"ou! #i!era!ure !"ere is no agreemen! o(er *"e!"er a

#arge or sma## board ac"ie(es be!!er go(ernance5 Hermac 199? sugges!s !"a! !"e sma##er !"e

board of direc!ors !"e be!!er !"e firms $erformance5 Hermac 199? fur!"er argued !"a! #arger

boards are found !o be s#o* in decision maing5

)oreo(er Hermac 199? documen!s an in(erse re#a!ion be!*een board si>e and $rofi!abi#i!%

asse! u!i#i>a!ion and obins ;5 I! ma% be argued !"a! #imi!ing board si>e is be#ie(ed !o im$ro(e

firm $erformance because !"e benefi!s of #arger boards increased moni!oring are ou!*eig"ed

b% !"e $oorer communica!ion and decision maing of #arger grou$s +i$!on and +orsc" 1992O

<ensen 19935

ccording !o sec!ion 30 of Insurance c! 200 @no insurer shall have a board of directors

composed of less than + natural persons of which per cent shall be independent directors, or

such other number and percentage as may be approved by the ./0 A5

ab#e 11 abo(e s"o*s !"a! on a(erage Board Si>e U 9 for insurers5 "erefore gi(en Bro*n and

Ca%#or 2004 s"o*ed !"a! firms *i!" board si>es of be!*een ? and 1 "a(e "ig"er re!urns on

eui!% and "ig"er ne! $rofi! margins !"an do firms *i!" o!"er board si>es i! ma% be conc#uded

!"a! *i!" an o$!ima# Board si>e is 7 as $er reuiremen!s of !"e Insurance c! 2005

'ina##% i! is no!ed !"a! Board )ee!ing !!endance is significan!#% corre#a!ed !o ;5 -egu#ar board

mee!ings a##o* $o!en!ia# $rob#ems !o be iden!ified discussed and a(oided and dri(es !"e

cor$ora!e go(ernance s%s!em5 No go(ernance s%s!em *i## be effec!i(e if direc!ors do no! mee!

regu#ar#%5 Pn a(erage !"e en!ire BP of insurers mee! 8 !imes $er %ear *"ic" ma% be

considered #audab#e5

o conc#ude $"ase 1 of !"is s!ud% re(ea#s !"a! !"ere is a re#a!ions"i$ be!*een cor$ora!e

go(ernance and $erformance and !"is re#a!ions"i$ is dri(en b% Board Inde$endence NonEecu!i(e Board Si>e and Board )ee!ing !!endance5


33




2!& C#RP#RATE G#'ER"A"CE ACTI#" I"$E=

"e Cor$ora!e 6o(ernance c!ion Inde is cons!ruc!ed fo##o*ing !"e me!"odo#og% e$#ained in

Sec!ion 3 abo(e5 ## ues!ionnaires des$a!c"ed *ere fi##ed and according#% e(er% a!!ribu!e of go(ernance ac!ion as e$#ained in me!"odo#og% *as ra!ed5 'or confiden!ia#i!% reasons !"e

resu#!s of !"e inde are $resen!ed *i!"ou! !"e rea# Com$an% Names5

CGA Inde &..>

! !"e ou!se! i! is in!eres!ing !o no!e !"a! !"e o(era## 6o(ernance Inde for %ear 2009 is 057245

-esu#!s s"o* !"a! in !"e %ear 2009 Board Coo$era!i(eness and -e#iabi#i!% "as !"e "ig"es! Inde

of 058045 Go*e(er mos! res$onden!s "ones!#% re$or!ed !"a! Board inde$endence is re#a!i(e#%#o* *i!" an indus!r% a! 0589 and 13 com$anies be#o* !"e indus!r% a(erage of 05895 I! s"ou#d

be no!ed !"a! i! is a $ar!icu#ari!% of )auri!ius because of i!s sma##ness !o "a(e !o!a##%

inde$enden! direc!ors5 "is fac! is "ig"#ig"!ed in !"e -e$or! on Cor$ora!e 6o(ernance for

)auri!ius 20035


34




CGA Inde &..

3

"e o(era## C6 Inde for 2010 im$ro(es b% 05014 !o reac" 05738 com$ared !o 05724 in 20095

"e s!riing fea!ure is !"a! Board inde$endence de!eriora!es b% 05021 from 2009 !o 20105 "isma% be e$#ained b% !"e fac! !"a! %ears 2009 and 2010 *ere in !"e !ransi!iona# $eriod for

im$#emen!a!ion of reuiremen!s of !"e Insurance c! 200 !ransi!iona# $eriod *"ic" ended b%

31 ecember 2010 and man% com$anies *ere maing im$#emen!a!ion arrangemen!s5 Go*e(er

fairness accoun!abi#i!% !rans$arenc% di#igence and e!"ica# be"a(iour im$ro(ed from 2009 !o

20105 I! is a#so in!eres!ing !o no!e !"a! !"e number of C6 Inde be#o* !"e indus!r% a(erage

"ig"#ig"!ed in red decreased from 73 in 2009 !o ?3 in 20105

GCA Inde &.

"e P(era## C6 Inde for 2011 im$ro(ed from 05738 in 2010 !o 0574? in 20115


3




I! is in!eres!ing !o no!e !"a! inde$endence im$ro(ed in 2011 *"i#e coo$era!i(eness

accoun!abi#i!% and res$onsibi#i!% indees fe## in 2011 com$ared !o 20105 I! is a#so no!ed !"a! !"e

ra!ing of com$anies im$ro(ed from 2009 !o 2011 es$ecia##% for Com$an% B *"ic" *as !aeno(er b% ano!"er com$an% in 20115 "e ra!ings for com$anies I and P *ere cons!an! in 2009 and

com$an% , cons!an! in 2011 because !"ese com$anies "ad on#% s!ar!ed o$era!ions in !"ose %ears

and !"us "ad no! im$#emen!ed !"eir s%s!ems fu##%5 Com$an% < and re$or!ed !o be foreign

branc"es of In!erna!iona# Go#dings !"erefore !"e res$ec!i(e com$anies re$or!ed no! being !o!a##%

a*are of !"e o$era!ions of !"e go(ernance s%s!ems in !"eir res$ec!i(e Go#dings5 Com$anies E

and J are sma## fami#% businesses *i!" re#a!i(e#% #o* mare! s"are and im$ro(ed cor$ora!e

go(ernance $rac!ices *"ic" e$#ains !"e number of Indees be#o* !"e Indus!r% Inde5


3?




"e C6 Inde cou#d be used as an ear#% *arning s%s!em using !"e !raffic #ig"! s%s!em ana#og%

i5e5 com$anies "a(ing green #ig"! are !"ose *"ose Inde range be!*een ?7M 100M of !"e

P(era## C6 Inde5 "e %e##o* #ig"! com$anies *i## be !"ose "a(ing an Inde range be!*een

33M !o ?7M and fina##% !"e Com$anies in -ed "a(ing an Inde range be#o* !"e 33M range5 "e

C6 Inde cou#d be $resen!ed as fo##o*s:

"us Com$anies E < P J and , need !o be moni!ored5 s a conc#usion !"e C6 Inde

cou#d be a !oo# for moni!oring go(ernance frame*or of insurance com$anies and bring

ua#i!a!i(e informa!ion in !"e ana#%sis of cor$ora!e go(ernance5


37




2!0 R EGRESSI#" M#$E1 / CGA I"$E= A"$ PERF#RMA"CE

s #aid ou! in !"e me!"odo#og% sec!ion !o es!ab#is" *"e!"er !"ere is a rea# #in be!*een

cor$ora!e go(ernance and $erformance in !"e insurance indus!r% of )auri!ius !"e Cor$ora!e

6o(ernance c!ion Inde of eac" insurer is regressed agains! obins ; as de$enden! (ariab#e

Jerf U V0 T V1 Inde T V2 cc T V3 rans T V4 -es$ T V eBe T V? Effe T V7

CP-e T V8 'air T W

Q"ere:• Jerf U Jerformance measured in !erms of ;• Inde U Inde$endence C6 Inde• cc U ccoun!abi#i!% C6 Inde• rans U rans$arenc% C6 Inde

• -es$ U -es$onsibi#i!% C6 Inde• ebe U i#igen! and E!"ica# Be"a(iour C6 Inde• Effe U Effec!i(eness C6 Inde• CP-e U Coo$era!i(e and re#iab#e C6 Inde• 'air U 'airness C6 Inde• WU error !erm

2!0! $escriptive Statistics

"e number of cases eamined is ?1 *i!" a mean of 0573 for ; and s!andard de(ia!ion of 0528


38

Descriptive Statistics

Mean Std. 6eiation *

To2in9s 8 .$##%& .'$)')& &1

Inde/endence .)!%$) .1%"!#' &1

0cco,nta2ility .$$'1 .11!"& &1

Trans/arency .!1)' .1#%)&! &1

:es/onsi2ility .$111 .1%)'& &1

6iligent and Et5ical

Be5aio,r

.&"%!' .1""1'" &1

Effectieness .$1$$ .1&)&%% &1

Coo/eratie and :elia2le .!'#$ .1'!)!1 &1

Fairness .$&""# .1$1")# &1




2!0!& Mode- Summary and A"#'A

'rom !"e )ode# Summar% *e obser(e !"a! !"e coefficien! of mu#!i$#e de!ermina!ions is 050

i5e5 abou! 1M of !"e (aria!ion in $erformance is e$#ained b% !"e inde$enden! (ariab#es5 "e

regression eua!ion a$$ears !o be (er% usefu# for maing $redic!ions since !"e $redic!i(e

ca$aci!% of !"e mode# is a! abou! 14M5

Pn !"e NP/ !ab#e i! is obser(ed !"a! J (a#ue X050 !"erefore a! 9M confidence #e(e# !"ere

eis!s enoug" e(idence !o conc#ude !"a! a! #eas! one of !"e inde$enden! (ariab#es is usefu# for

$redic!ing insurance $erformance as measured b% ;O !"erefore !"e mode# is usefu#5

I! ma% be conc#uded !"a! !"ere eis!s a re#a!ions"i$ be!*een Cor$ora!e 6o(ernance c!ion

Inde and $erformance in !"e Insurance Indus!r% of )auri!ius5

2!0!0 Corre-ation Coefficients

Coefficientsa

Model

Unstandardized

Coefficients

Standardized

Coefficients

t Sig.

Correlations Collinearity Statistics

B

Std.

Error Beta

Zero-

order Partial Part Tolerance VIF

(Constant 1.11& .')! %.#') .

Inde/endence -.%$% .'"# -.')! -1.&1$ .11' -.1' -.'1" -.1"% .)&' 1.$!

0cco,nta2ility -1.1$) .%%& -.)! -'.&#& .11 -.'$# -.#%# -.#1& .#!& '.)"1

Trans/arency .&1" .%#" .## 1.%11 .1&% -.&1 .1"' .1&" .#11 #.'1%

:es/onsi2ility .%#& .#1% .''# 1.#"1 .1$ ."! .1!" .1&$ .))" 1.$!"

6iligent and Et5ical

Be5aio,r

.)1) .'1) .#$# '.% .' .1&% .#1& .'!$ .)") 1.&!1

Effectieness .#)1 .#&" .'11 .") .#%$ -.1% .1#1 .11% .'" #.%%"

Coo/eratie and:elia2le

-.1'$ .%&& -.)" -.'$# .$!& -.1%$ -.#! -.## .## #.#1

Fairness -.&$1 .#'$ -.%1" -'.)1 .%) -.11 -.'$% -.'%& .#%# '."1!

a. 6e/endent Varia2le7 To2in9s 8


39




I! is obser(ed !"a! no! a## inde$enden! (ariab#es are ac!ua##% significan!#% corre#a!ed !o ;5 ! 1M

M and 10M significance #e(e# i! a$$ears !"a! some of !"e $redic!or (ariab#es can be remo(ed

from !"e fu## mode# as unnecessar%5

G%$o!"esis: Cri!eria:G0: /ariab#e is no! usefu# If $ Y 0501 050 and 0510 acce$! G0

G1: /ariab#e is usefu# If $ X 0501 050 and 0510 re.ec! G0

I! is obser(ed !"a! !"e "%$o!"esis is su$$or!ed for i#igen! and E!"ica# Be"a(iour 'airness and

!o some degree accoun!abi#i!% 11M5 6i(en !"a! 'airness and ccoun!abi#i!% "a(e nega!i(e

corre#a!ions *i!" ; I be#ie(e !"a! !"e dri(er in !"e re#a!ions"i$ be!*een !"e Cor$ora!e

6o(ernance c!ion Inde and ; is i#igen! and E!"ica# Be"a(iour

S5 -5 iacon and C5 5 Enne* 199? soug"! !o e$#ore !"e im$#emen!a!ion of cor$ora!e e!"ica#

cu#!ure and $o#icies as an ad.unc! !o forma# forms of cor$ora!e go(ernance in ,= Insurance

Com$anies5 "e% sur(e%ed senior eecu!i(es in ,5=5 insurance com$anies !o e$#ore !"e

im$#emen!a!ion of e!"ica# $o#icies and codes !o in(es!iga!e e!"ica# a!!i!udes and !o ana#%se !"e

e!en! !o *"ic" !"ese $o#icies and a!!i!udes (aried among com$anies5 "eir resu#!s sugges! !"a!

e!"ica# $o#icies "a(e a "ig"er $rofi#e and e!"ica# a!!i!udes and be"a(iour are more $osi!i(e

*"ic" su$$or! !"e con!en!ion !"a! a s!rong cor$ora!e e!"ica# cu#!ure ma% be u!i#ised !o en"ance

forma# cor$ora!e go(ernance ins!rumen!s5 "erefore i! ma% be conc#uded !"a! firms *i!"di#igen! and e!"ica##% dri(en Board of irec!ors *i## $erform be!!er5 Pn !"e o(era## !"e resu#!s

of $"ase 3 sugges! !"a! !"e be!!er !"e Cor$ora!e 6o(ernance c!ion Inde be!!er $erformance

*i## be5


40




3! C#"C1%SI#"

Insurance com$anies as cus!odian of $o#ic%"o#ders funds "a(e !"e du!% !o fo##o* "ig"

s!andards of cor$ora!e go(ernance and ris managemen! in $ar!icu#ar5 Insurance $o#ic%"o#ders

are #arge#% de$enden! on !"e abi#i!% of managemen! and !"e Board of irec!ors !o !ae

conser(a!i(e and $ruden! riss and "a(e sound ca$i!a# managemen! $o#icies5 In addi!ion

$o#ic%"o#ders de$end on !"e *i##ingness and abi#i!% of s"are"o#ders !o in.ec! addi!iona# ca$i!a#

*"en needed *"ic" is some"o* de$enden! on !"eir confidence in !"e abi#i!ies of !"e Board of

irec!ors5

Insurance business is c"arac!erised b% com$#e $rinci$a#agen! re#a!ions"i$s as *e## as

as%mme!r% in mare! $o*er and informa!ion among (arious s!ae"o#ders5 Some agenc%

$rob#ems are common !o a## insurance en!i!ies *"i#e o!"ers arise in !"e con!e! of $ar!icu#ar ca!egor% of Insurance Business #icensed for name#% #ong !erm insurance genera# insurance

andor reinsurance5 "erefore s!rong go(ernance in !"e insurance sec!or reuires !"a! !"e

in!erna# organs of !"e com$an% !"a! is i!s managemen! !"e s%s!ems of ris managemen!

in!erna# audi! and in!erna# con!ro#s !"e com$an%s ac!uar% *or effec!i(e#% and !"e Board

s"ou#d "a(e o(ersig"! of !"em a##5

"e ac!i(i!ies of direc!ors of an% insurance com$an% *"e!"er or no! !"e com$an% is $ub#ic#%

!raded are sub.ec! !o re(ie* b% !"e Insurance regu#a!or *"ic" "as a#mos! cer!ain#% magnified!"e im$or!ance of cor$ora!e go(ernance and direc!or ac!i(i!ies *i!"in !"e con!e! of !"e

regu#a!or% frame*or manda!or% for a## Insurers5 "is is cer!ain#% ref#ec!ed b% !"e Insurance

Indus!r% Cor$ora!e 6o(ernance c!ion inde of 0574? a! !"e end of 20115

"is s!ud% $ro(ides e(idence !"a! !"ere is a re#a!ions"i$ be!*een cor$ora!e go(ernance and

$erformance in !"e Insurance indus!r% of )auri!ius and gi(es bo!" a uan!i!a!i(e and ua#i!a!i(e

mo!i(e for Insurers !o con!inue !"eir in(es!men! in !"eir Cor$ora!e 6o(ernance 'rame*or

@1hat’s good for corporate governance is good for the share priceA


41




5! REFERE"CES

15 BBP + < J-= H N J-=E- S 2000 @"e Effec!s of udi! Commi!!eec!i(i!% and Inde$endence on Cor$ora!e 'raudA )anageria# 'inance /o#5 2? No5

11 $$5 ?75

25 6-Q+ N =NPEBE- C - 199? @'irm Jerformance and )ec"anisms !oCon!ro# genc% Jrob#ems be!*een )anagers and S"are"o#dersA !"e <ourna# of 'inancia# and ;uan!i!a!i(e na#%sis /o#5 31 No5 3 $$5 3773975

35 NE-SPN - C )NSI S N -EEB ) 2004 @Board C"arac!eris!icsccoun!ing -e$or! In!egri!% and "e Cos! Pf eb!A <ourna# of ccoun!ing andEconomics /o#5 37 No5 3 $$5 313425

45 B+I6 B - )PHE- - C N -P - S 199? @CEP ua#i!% and 'irmJerformance: Q"a!Ks !"e 'ussA S!ra!egic )anagemen! <ourna# /o#5 17 No5 1 $$5415

5 B,E- - '-I<NS B PEN - N P,-NI- 2008 @"e im$ac! of cor$ora!e go(ernance on cor$ora!e $erformance: E(idence from <a$anA JacificBasin 'inance <ourna# /o#5 1? No5 3 $$5 23?215

?5 B,E- - 6,ENSE- N N PEN - 2004 @Em$irica# E(idence onCor$ora!e 6o(ernance in Euro$e: "e Effec! on S!oc -e!urns 'irm /a#ue andJerformanceA <ourna# of sse! )anagemen! /o#5 No5 2 $$5 911045

75 BHSIN6E- B N GPS=ISSPN - E 1990 @"e Com$osi!ion of Boards of irec!ors and S!ra!egic Con!ro#: Effec!s on Cor$ora!e S!ra!eg%A cadem% of )anagemen! -e(ie* /o#5 1 No5 1 $$5 72875

85 BES+EH ) S 199? @n Em$irica# na#%sis of !"e -e#a!ion be!*een !"e Boardof irec!or Com$osi!ion and 'inancia# S!a!emen! 'raudA ccoun!ing -e(ie* /o#5

71 No5 4 $$5 443 4?5

95 BE-6E- J 6 P'E= E N HE-)C= + 1997 @)anageria# En!renc"men!and Ca$i!a# S!ruc!ure ecisionsA <ourna# of 'inance /o#5 2 No5 4 $$5 141114385


42




105 BG6 S N B+C= B 1999 @"e uncer!ain re#a!ions"i$ be!*een boardcom$osi!ion and firm $erformanceA "e Business +a*%er /o#5 4 No5 3 $$5 9219?35

115 BG6 S N B+C= B 2002 @"e Noncorre#a!ion be!*een BoardInde$endence and +ong!erm 'irm JerformanceA "e <ourna# of cor$ora!ion #a*/o#5 27 No5 2 $$5 2315

125 BG6 S N BP+PN B 2008 @Cor$ora!e 6o(ernance and 'irmJerformanceA <ourna# of Cor$ora!e 'inance /o#5 14 No5 3 $$5 272735

135 BGCG-HH = -HCG,G,-I N -P S / 2008 EconomicConseuences of K-egu#a!ion on Cor$ora!e 6o(ernanceK: E(idence from IndiaQoring Ja$er "!!$:ssrn5com$a$erU?408425

145 B+C= B 2001a @"e cor$ora!e go(ernance be"a(iour and mare! (a#ue of -ussian firmsA Emerging )are!s -e(ie* /o#5 2 No5 2 $$5 891085

15 B+C= B 2001B @oes Cor$ora!e 6o(ernance )a!!er Crude es! ,sing-ussian a!aA ,ni(ersi!% of Jenns%#(ania +a* -e(ie* /o#5 149 No5 ? $$5 21312105

1?5 B+C= B S <N6 G N =I) Q 200? @oes Cor$ora!e 6o(ernance Jredic!'irmsK )are! /a#ues E(idence from =oreaA <ourna# of +a* Economics and

Prgani>a!ion /o#5 22 No5 2 $$5 3??4135

175 B-+EH N 2004 @Cor$ora!e 6o(ernance Scoring and !"e +in be!*eenCor$ora!e 6o(ernance and Jerformance Indica!ors: in searc" of !"e Go#% 6rai#ACor$ora!e 6o(ernance: n In!erna!iona# -e(ie* /o#5 12 No5 1 $$5 8105

185 B-IC= I E J+)PN P N Q+ < = 200? @CEP Com$ensa!ion irec!or Com$ensa!ion and 'irm Jerformance: E(idence of Cron%ismA <ourna# of Cor$ora!e 'inance /o#5 12 No5 3 $$5 4034235

195 B-IC=+EH < CP+ES < + N E--H - + 1994 @Pu!side irec!ors and !"edo$!ion of Joison Ji##sA <ourna# of 'inancia# Economics /o#5 3 No5 3 $$5 3713905


43




205 B-IC=+EH < N <)ES C ) 1987 @"e aeo(er )are! Cor$ora!e BoardCom$osi!ion and P*ners"i$ S!ruc!ure: !"e Case for BaningA <ourna# of +a* andEconomics /o#5 30 No51 $$5 1?11805

215 B-PQN + N CH+P- ) + 2004 Cor$ora!e 6o(ernance and 'irmJerformance Qoring Ja$er "!!$:ssrn5com$a$erU8?4235

225 B,CGGP+L - 1989 Business En(ironmen! and Jub#ic Jo#ic%: Im$#ica!ions for )anagemen! and S!ra!eg% 'ormu#a!ion 3rd edi!ion Jren!ice Ga## Ne* <erse%5

235 C-/E- < 2000 @"e P$$or!uni!% for -ein(en!ing Cor$ora!e 6o(ernance in<oin! /en!ure Com$aniesA Cor$ora!e 6o(ernance: n In!erna!iona# -e(ie* /o#5 8 No5 1 $$5 7805

245 C-/E- < N C-/E- ) 2001 Car(erKs Jo#ic% 6o(ernance )ode# in Non$rofi! Prgani>a!ions E#ec!ronic /ersion a(ai#ab#e a! "!!$:***5Car(ergo(ernance5 Com$gn$5"!m5

25 CG-N - 1998 Boards a! Qor: Go* Cor$ora!e Boards Crea!e Com$e!i!i(ed(an!age <oss% Bass Jub#is"ers San 'rancisco5

2?5 CGEN C - 6,P Q N )NE / 2003 @)anageria# P*ners"i$ and 'irm

/a#ua!ion: E(idence from <a$anese 'irmsA JacificBasin 'inance <ourna# /o#5 11 No5 3 $$5 2?72835

275 C+ESSENS S 200? @Cor$ora!e 6o(ernance and e(e#o$men!A Qor#d Ban -esearc" Pbser(er /o#5 21 No5 1 $$5 911225

285 CP''EH B S N QN6 < 1998 @Board i(ersi!% and )anageria# Con!ro# asJredic!ors of Cor$ora!e Socia# JerformanceA <ourna# of Business E!"ics /o#5 17 No5 14 $$5 19 1?035

295 CP++IE- < N ESEBN - 1999 @6o(ernance in !"e Jar!ici$a!i(ePrganisa!ion: 'reedom Crea!i(i!% and E!"icsA <ourna# of Business E!"ics /o#5 21 No5 2 $$5 1731885


44

http://www/

http://www/

http://www/




305 CPNHPN ) < N JEC= S I 1998a @Board Commi!!ee -emunera!ionCommi!!ees and o$ )anagemen! Com$ensa!ionA cadem% of )anagemen!<ourna# /o#5 41 No5 2 $$5 14? 175

315 CP-E < E GP+G,SEN - Q N +-C=E- ' 1999 @Cor$ora!e6o(ernance C"ief Eecu!i(e Pfficer Com$ensa!ion and 'irm JerformanceA<ourna# of 'inancia# Economics /o#5 1 No5 3 $$5 37140?5

325 /IES 1999 S!ra!egic $$roac" !o Cor$ora!e 6o(ernance 6o*er Jub#is"ing +!d5 #ders"o!5

335 /IS < G SCGPP-)N ' N PN+SPN + 1997 @o*ard S!e*ards"i$ "eor% of )anagemen!A cadem% of )anagemen! -e(ie* /o#5 22 No5 1 $$5 20475

345 E NICP+Z 6 +E/EN + N ,E = 2008 @Cor$ora!e go(ernance ua#i!%:rends and rea# effec!sA <ourna# of 'inancia# In!ermedia!ion /o#5 17 No5 2 $$5 1982285

35 E)I-6 I S 199 @ssessing S"or!erm Jerce$!ions of 6rou$ 'inanceirec!ors of ,= Com$aniesA !"e Bri!is" ccoun!ing -e(ie* /o#5 27 No5 4 $$52472815

3?5 E)I-6 I S C+-= Q Q N B+INE 5 1998 'inancia# )are!sCor$ora!e 6o(ernance and )anagemen! of -& in I S emirag Ed5 Cor$ora!e6o(ernance ccoun!abi#i!% and Jressures !o Jerform: n In!erna!iona# S!ud% $$593120 <I Jress Inc5 Connec!icu!5

375 E)SEL G N +EGN = 198 @"e S!ruc!ure of Cor$ora!e P*ners"i$:Causes and ConseuencesA <ourna# of Jo#i!ica# Econom% /o#5 93 No5 ? $$5 115

385 ,''G,ES J N =BI- - 2008 @Is !"e Ja%Jerformance -e#a!ions"i$

#*a%s Josi!i(e E(idence from !"e Ne!"er#andsA <ourna# of )u#!ina!iona#'inancia# )anagemen! /o#5 18 No5 1 $$5 4?05

395 ,-NE/ - N =I) E G 200 @o S!ea# or No! !o S!ea#: 'irm !!ribu!es+ega# En(ironmen! and /a#ua!ionA "e <ourna# of 'inance /o#5 ?0 No5 3 $$514?114935


4




405 ELL)E+ ) N QSPN -5 1997 Eecu!i(e -emunera!ion and Cor$ora!eJerformance in = =ease% & ) Qrig"! Eds5 Cor$ora!e 6o(ernance:-es$onsibi#i!ies -iss and -emunera!ion $$5 ?192 <o"n Qi#e% & Sons Ne*Hor5

415 ') E ' N <ENSEN ) C 1983 @Se$ara!ion of P*ners"i$ and Con!ro#A<ourna# of +a* and Economics /o#5 2? No5 2 $$5 301325

425 '+P-C=IS C 200 @In!erna# Cor$ora!e 6o(ernance )ec"anisms and Cor$ora!eJerformance: E(idence for ,= 'irmsA $$#ied 'inancia# Economics +e!!ers /o#5 1 No5 4 $$5 21121?5

435 '-N=S < N )HE- C 199? @Gos!i#e aeo(ers and !"e Correc!ion of )anageria# 'ai#ureA <ourna# of 'inancia# Economics /o#5 40 No5 1 $$5 1?31815

445 '-EE)N - E 1984 S!ra!egic )anagemen!: S!ae"o#der $$roac" Ji!manJub#is"ing Inc5 )assac"use!!s5

45 6P)JE-S J ISGII < N )E-IC= 2003 @Cor$ora!e 6o(ernance andEui!% JricesA ;uar!er#% <ourna# of Economics /o#5 118 No5 1 $$5 10715

4?5 6PNCG-P/ I QE-NE- < - N LI))E-)NN < 200? @oes

Com$#iance *i!" !"e 6erman Cor$ora!e 6o(ernance Code Ga(e an Im$ac! on S!oc /a#ua!ion n em$irica# ana#%sisA Cor$ora!e 6o(ernance: n In!erna!iona# -e(ie*/o#5 14 No5 $$5 432445

475 GE-)+IN B E N QEISBCG ) S 1991 @"e effec!s of board com$osi!ionand direc! incen!i(es on firm $erformanceA 'inancia# managemen! /o#5 20 No5 4 $$

485 GI))E+BE-6 C J G,BB- - 6 N J+I 1999 @,nders!anding !"e

de!erminan!s of manageria# o*ners"i$ and !"e #in be!*een o*ners"i$ and $erformanceA <ourna# of 'inancia# Economics /o#5 3 No5 3 $$5 333845

495 GP C= 200 @Cor$ora!e 6o(ernance and Cor$ora!e Com$e!i!i(eness: anin!erna!iona# ana#%sisA Cor$ora!e 6o(ernance: n In!erna!iona# -e(ie* /o#5 13 No5 2 $$5 211235


4?




05 GHP <IN =I) SPPN S,= HPPN 2007 Cor$ora!e go(ernance and 'irm $erformance in =orea (alaysian 2ccounting 3eview /P+,)E ? NP5 2 2007 $$:1 18

15 GP+E-NESS C 6 =-PSLNE- - S N SGEEGN J 1999 @Qere !"e6ood P#d a%s !"a! 6ood C"anges in )anageria# S!oc P*ners"i$ since !"e 6rea!e$ressionA !"e <ourna# of 'inance /o#5 4 No5 2 $$5 434?95

25 <C;,E)IN N E 6GE++INC= E 1980 @'ami#ia# Con!ro# Si>e andJerformance in !"e +arges! 'renc" 'irmsA Euro$ean Economic -e(ie* /o#5 13 No51 $$5 81915

35 <ENSEN ) C 1993 @"e )odern Indus!ria# -e(o#u!ion Ei! and !"e 'ai#ure of In!erna# Con!ro# S%s!emsA <ourna# of 'inance /o#5 48 No5 3 $$5 8318805

45 =J+N S N 1994 @o$ Eecu!i(es -e*ards and 'irm Jerformance: Com$arison of <a$an and !"e ,ni!ed S!a!esA !"e <ourna# of Jo#i!ica# Econom% /o#5102 No5 3 $$5 104?5

5 =-JP'' < ) )-- ) Q < N NIE+SPN ) 6 2000 Cor$ora!e6o(ernance and 'irm Jerformance B#ac*e## Jub#is"ers /irginia5

?5 =H < N SI+BE-SPN 5 199? Cor$ora!e 6o(ernance in !"e Business of

Economics Pford ,ni(ersi!% Jress Pford5

75 =ESEH = N Q-I6G ) ES55 19975 Cor$ora!e 6o(ernance:-es$onsibi#i!ies -iss and -emunera!ion5 Ne* Hor: <o"n Qi#e% & Sons5

85 =+JJE- + ' N +P/E I 2004 @Cor$ora!e go(ernance in(es!or $ro!ec!ionand $erformance in emerging mare!sA <ourna# of Cor$ora!e 'inance /o#5 10 No5 $$5 7037285

95 =+EIN 2002 @udi! commi!!ee board of direc!or c"arac!eris!ics and earnings

managemen!A <ourna# of ccoun!ing and Economics /o#5 33 No5 3 $$5 374005

?05 =+EIN J SGJI-P N HP,N6 < 200 @Cor$ora!e 6o(ernance 'ami#%P*ners"i$ and 'irm /a#ue: !"e Canadian e(idenceA Cor$ora!e 6o(ernance: nIn!erna!iona# -e(ie* /o#5 13 No5 ? $$5 7?97845


47




?15 =P+E S 199? @)anageria# P*ners"i$ and 'irm Jerformance: Incen!i(es or -e*ardsA d(ances in 'inancia# Economics /o#5 2 No5 $$5 1191495

?25 + JP- - +PJELESI+NES ' SG+EI'E- N /ISGNH - 2002@In(es!or Jro!ec!ion and Cor$ora!e /a#ua!ionA !"e <ourna# of 'inance /o#5 7 No53 $$5 114711705

?35 +IN + 199? @"e Effec!i(eness of Pu!side irec!ors as a Cor$ora!e 6o(ernance)ec"anism: "eories and E(idenceA Nor!"*es!ern ,ni(ersi!% +a* -e(ie* /o#5 90 No5 3 $$5 898 97?5

?45 +INS = / 2003 @Eui!% P*ners"i$ and 'irm /a#ue in Emerging )are!sA<ourna# of 'inancia# & ;uan!i!a!i(e na#%sis /o#5 38 No5 1 $$5 191845

?5 +IJPN ) N +P-SCG < Q 1992 @ )odes! Jro$osa# for Im$ro(edCor$ora!e 6o(ernanceA !"e Business +a*%er /o#5 48 No5 1 $$5 95

??5 )IN B 6 ) B-,CE N B,C= 199? @o!a# Board -emunera!ion andCom$an% JerformanceA Economic <ourna# /o#5 10? No5 439 $$5 1?271?445

?75 )-E= 6-,SLCLHNS=I 200? Cor$ora!e 6o(ernance and 'inancia#Jerformance of Com$anies in Jo#and 4nternational 2dvances in 5conomic

3esearch /o#5 12 200? $$: 21F29

?85 )P-C= - SG+EI'E- N /ISGNH - Q 1988 @)anagemen! o*ners"i$and mare! (a#ua!ion: n em$irica# ana#%sisA <ourna# of 'inancia# Economics /o#520 No5 $$5 293315

?95 )P-C= -O SG+EI'E- 5O /ISGNH - 1989: o )anageria# ob.ec!i(es dri(e bad acuisi!ions <ourna# of 'inance 4 )arc": 3148

705 [E6- B N B[G-EN [ 2003 R6o(ernance and Jerformance

-e(isi!edR EC6I 'inance Qoring Ja$er "!!$:ssrn5com$a$erU4234?1

715 J-,) E 200 @oes isc#osure on Cor$ora!e 6o(ernance +ead !o P$ennessand rans$arenc% in Go* Com$anies are )anagedA Cor$ora!e 6o(ernance: nIn!erna!iona# -e(ie* /o#5 13 No5 $$5 7027095


48




725 JEI6-EQ ) 1992 @Pn S!ud%ing )anageria# E#i!esA S!ra!egic )anagemen!<ourna# /o#5 13 $$5 1?31825

735 -PCGE < 200 Cor$ora!e 6o(ernance in sia -ou!#edge Pon5 -ose C 200@)anageria# P*ners"i$ and 'irm Jerformance in +is!ed anis" 'irms: In Searc" of !"e )issing +inA Euro$ean )anagemen! <ourna# /o#5 23 No5 $$5 423

745 SG+EI'E- N /ISGNH - Q 1997 @ Sur(e% of Cor$ora!e 6o(ernanceA!"e <ourna# of 'inance /o#5 2 No5 2 $$5 7377835

75 SGP- G N =ESEH =5 1997 Ins!i!u!iona# S"are"o#ders and Cor$ora!e6o(ernance in = =ease% & ) Qrig"! Eds5 Cor$ora!e 6o(ernance:-es$onsibi#i!ies -iss and -emunera!ion $$5 23?0 <o"n Qi#e% & Sons Ne*

Hor5

7?5 SGP- G N =ESEH = 1999 @)anageria# P*ners"i$ and !"e Jerformanceof 'irms: E(idence from !"e ,=A <ourna# of Cor$ora!e 'inance /o#5 No5 1 $$5791015

775 /IS 2003 I)' re$or! on )auri!ius F 'inancia# S!abi#i!% ssessmen!Jrograms

785 /ISGNH -PBE- Q & + JP- -5 & +PJELESI+NES '5 &SG+EI'E- 5 +a* and 'inance <ourna# of Jo#i!ica# Econom% 1998 10?? $$5 1113

795 /E-SCGPP- C C 1998 @ S!ud% of !"e +in be!*een a Cor$ora!ionKs 'inancia#Jerformance and I!s Commi!men! !o E!"icsA <ourna# of Business E!"ics /o#5 17 No5 13 $$5 109 11?5

805 QISE)N - ) N 6P)EL)E<I + - 1998 @ Be"a(ioura# genc% )ode#of )anageria# -is aingA cadem% of )anagemen! -e(ie* /o#5 23 No5 1 $$5133135

815 Q-,C= = G 1989 @Eui!% P*ners"i$ Concen!ra!ion and 'irm /a#ue: E(idencef J i ! E i! 'i i A < # f 'i i # E i / # 23 N 1

Date post:	01-Mar-2018
Category:	Documents
Upload:	kristen-nallan
View:	224 times
Download:	0 times

Clifford Appasamy, Matthew Lamport, Boopendra Seetanah, Raja Vinesh Sannassee

Documents