1 / 19

Organizational Form, Ownership Structure, and Top Executive Turnover: Evidence from the Property-Casualty Insurance Indu

Organizational Form, Ownership Structure, and Top Executive Turnover: Evidence from the Property-Casualty Insurance Industry. Jiang Cheng J. David Cummins Tzuting Lin 2012 NTUICF Meeting Dec. 06, 2012 Taipei. Introduction.

heman
Télécharger la présentation

Organizational Form, Ownership Structure, and Top Executive Turnover: Evidence from the Property-Casualty Insurance Indu

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Organizational Form, Ownership Structure, and Top Executive Turnover: Evidence from the Property-Casualty Insurance Industry Jiang Cheng J. David Cummins Tzuting Lin 2012 NTUICF Meeting Dec. 06, 2012 Taipei

  2. Introduction • Most previous studies on CEO turnover focus only on publicly-traded stock companies. • Why we study the U.S. property-casualty insurance industry?

  3. CEO Turnover in Publicly-Traded Stocks • The general consensus: negative relationship between firm performance and the likelihood of CEO turnover, especially non-routine turnover. • negative relationship between firm performance and an outside replacement • The magnitude of this relation, however, depends on the quality of corporate governance within the firm and outside market forces.

  4. Publicly-Traded and Closely-Held Stocks • Publicly-traded stocks: monitoring from the capital market (e.g., financial analysts and institutional investors), the takeover market, and boards of directors. • Closely-held stocks: a limited number of shareholders ; familiar and involved in management (Nagar, Petroni, and Wolfenzon, 2011).

  5. Family-Controlled Stocks • Controlling family: (Anderson and Reeb, 2003; Li and Srinivasan, 2011) • Non-family-member CEOs and family member CEOs

  6. Mutuals and Reciprocals • No traded shares and inalienability of ownership rights (Mayer and Smith, 1988) • Higher fraction of outside board members (Mayers, Shivdasani, Smith, 1997)

  7. Hypothesis Development • Hypothesis 1: Mutuals have lower probability of CEO turnover and lower sensitivity of CEO turnover to firm performance than stocks. • Hypothesis 1-1: Mutuals have lower probability of CEO turnover and lower sensitivity of CEO turnover to firm performance than publicly-traded non-family-owned stocks.

  8. Hypothesis Development • Hypothesis 2: Closely-held non-family-owned stock insurers are less likely to remove the CEO when the firm is poorly performing than publicly-traded non-family-owned stocks. • Hypothesis 3: Among common stock insurance companies, family-member CEOs of a family firm have the lowest likelihood of non-routine turnover and lowest turnover-performance sensitivity.

  9. Hypothesis Development • Hypothesis 4-1: Compared to peers in non-family-controlled publicly-traded stock firms, a non-family CEO in a family-controlled publicly-traded stock firm is more likely to be removed. • Hypothesis 4-2: Compared to peers in non-family-controlled closely-held stock firms, a non-family CEO in a family-controlled closely-held stock firm is more likely to be removed.

  10. Hypothesis Development • Hypothesis 5: The likelihood of outside replacement is lower for mutuals than for publicly-traded non-family-controlled stock insurers. • Hypothesis 6: Closely-held stock non-family-controlled insurers are less likely to choose outside CEO successors than publicly-traded non-family-controlled stock insurers.

  11. Hypothesis Development • Hypothesis 7-1: Compared to peers in non-family-controlled publicly-traded stock firms, the incoming CEO successor in a family-controlled publicly-traded stock firm is more likely to be an outsider if the outgoing CEO is not a family member. • Hypothesis 7-2: Compared to peers in non-family-controlled publicly-traded stock firms, the incoming CEO successor in a family-controlled publicly-traded stock firm is less likely to be an outsider if the outgoing CEO is a family member. • Hypothesis 7-3: Compared to peers in non-family-controlled closely-held stock firms, the incoming CEO successor in a family-controlled closely-held stock firm is more likely to be an outsider if the outgoing CEO is not a family member. • Hypothesis 7-4: Compared to peers in non-family-controlled closely-held stock firms, the incoming CEO successor in a family-controlled closely-held stock firm is less likely to be an outsider if the outgoing CEO is a family member.

  12. Sample Selection • A.M. Best’s Insurance Reports: Property/Casualty Edition • Proxy statements of the publicly-traded insurers • National Association of Insurance Commissioners (NAIC) annual statement database • 751 firms and 8,755 firm-years (1993-2006) hand-collected firm ownership structure, CEO turnover/succession and board information

  13. Descriptive Statistics

  14. Descriptive Statistics

  15. Regression Results

  16. Economic Significance by Ownership Structure

  17. Evidence on Successor Choice

  18. Conclusion • CEO turnover and succession patterns change with organization forms and ownership structures in the property-casualty insurance industry.

More Related