Organizational Form, Ownership Structure, and CEO Turnover: Evidence from the Property–Casualty Insurance Industry

32 Pages Posted: 6 Feb 2017

See all articles by Jiang Cheng

Jiang Cheng

Shanghai Jiao Tong University (SJTU)

J David Cummins

Temple University - Risk Management & Insurance & Actuarial Science

Tzuting Lin

National Taiwan University - Department of Finance

Date Written: March 2017

Abstract

We investigate the role of organizational form and ownership structure in corporate governance by examining CEO turnover for U.S. property–casualty insurers. Our article extends the prior literature by decomposing stock insurers into publicly traded and nonpublicly traded (closely held) entities and breaking down both types of stocks into family‐owned and nonfamily‐owned categories. We further subdivide family firms into those with family‐member CEOs and those with nonfamily CEOs. We find that the probability of nonroutine turnover has a significant negative relationship with firm performance. Turnover probabilities vary significantly by organizational form and ownership structure. Family firms with family‐member CEOs have the lowest turnover rate of any ownership type. The probability of nonroutine CEO turnover is lower for mutuals than for publicly traded nonfamily stock firms and also for all other types of stocks except closely held family stock firms and publicly traded family stocks with family‐member CEOs. The results provide further evidence that organizational form matters in terms of controlling agency costs in financial services firms.

Suggested Citation

Cheng, Jiang and Cummins, J. David and Lin, Tzuting, Organizational Form, Ownership Structure, and CEO Turnover: Evidence from the Property–Casualty Insurance Industry (March 2017). Journal of Risk and Insurance, Vol. 84, Issue 1, pp. 95-126, 2017, Available at SSRN: https://ssrn.com/abstract=2911350 or http://dx.doi.org/10.1111/jori.12083

Jiang Cheng (Contact Author)

Shanghai Jiao Tong University (SJTU) ( email )

KoGuan Law School
Shanghai 200030, Shanghai 200052
China

J. David Cummins

Temple University - Risk Management & Insurance & Actuarial Science ( email )

Fox School of Business and Management
1801 Liacouras Walk.
Philadelphia, PA 19122
United States
215-204-8468 (Phone)
215-204-4712 (Fax)

Tzuting Lin

National Taiwan University - Department of Finance ( email )

1, Sec. 4, Roosevelt Road
Taipei, 106
Taiwan

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