Do financial experts on the board matter? An empirical test from the United Kingdom's non-life insurance industry

Michael Adams, Wei Jiang

Research output: Contribution to journalArticle

Abstract

We examine the relation between board-level financial expertise and six measures of performance using panel data drawn from the United Kingdom's (UK) non-life insurance industry. We find that collectively, financial experts have a beneficial influence on the performance outcomes of insurers. We also observe that board-level qualified accountants and actuaries are linked with superior performance in all six of our selected financial outcome measures. Professional insurance underwriters are associated with sound solvency levels (low leverage) and underwriting results, but not positive earnings-based measures. This suggests that underwriters may not be as adept at group-level earnings enhancement as accountants and actuaries. Additionally, we find that the introduction of IFRS 4 in 2004/5 did not have a significant impact on board composition and financial outcomes. Finally, we consider that our results could have commercial and/or policy implications.
LanguageEnglish
JournalJournal of Accounting, Auditing and Finance
Early online date30 Apr 2017
DOIs
StatusPublished - 2017

Fingerprint

Non-life insurance
Empirical test
Insurance industry
Accountants
Underwriters
Actuaries
Insurer
Board composition
Leverage
Insurance
Solvency
Panel data
Enhancement
Underwriting
Policy implications
Financial expertise
International Financial Reporting Standards

Keywords

  • Insurance
  • boards of directors
  • Financial Experts
  • UK

Cite this

@article{ce490374fab74efb9e9bf4b43b597508,
title = "Do financial experts on the board matter? An empirical test from the United Kingdom's non-life insurance industry",
abstract = "We examine the relation between board-level financial expertise and six measures of performance using panel data drawn from the United Kingdom's (UK) non-life insurance industry. We find that collectively, financial experts have a beneficial influence on the performance outcomes of insurers. We also observe that board-level qualified accountants and actuaries are linked with superior performance in all six of our selected financial outcome measures. Professional insurance underwriters are associated with sound solvency levels (low leverage) and underwriting results, but not positive earnings-based measures. This suggests that underwriters may not be as adept at group-level earnings enhancement as accountants and actuaries. Additionally, we find that the introduction of IFRS 4 in 2004/5 did not have a significant impact on board composition and financial outcomes. Finally, we consider that our results could have commercial and/or policy implications.",
keywords = "Insurance, boards of directors, Financial Experts, UK",
author = "Michael Adams and Wei Jiang",
year = "2017",
doi = "10.1177/0148558X17705201",
language = "English",
journal = "Journal of Accounting, Auditing and Finance",
issn = "0148-558X",
publisher = "Greenwood Publishing Group Inc.",

}

TY - JOUR

T1 - Do financial experts on the board matter? An empirical test from the United Kingdom's non-life insurance industry

AU - Adams,Michael

AU - Jiang,Wei

PY - 2017

Y1 - 2017

N2 - We examine the relation between board-level financial expertise and six measures of performance using panel data drawn from the United Kingdom's (UK) non-life insurance industry. We find that collectively, financial experts have a beneficial influence on the performance outcomes of insurers. We also observe that board-level qualified accountants and actuaries are linked with superior performance in all six of our selected financial outcome measures. Professional insurance underwriters are associated with sound solvency levels (low leverage) and underwriting results, but not positive earnings-based measures. This suggests that underwriters may not be as adept at group-level earnings enhancement as accountants and actuaries. Additionally, we find that the introduction of IFRS 4 in 2004/5 did not have a significant impact on board composition and financial outcomes. Finally, we consider that our results could have commercial and/or policy implications.

AB - We examine the relation between board-level financial expertise and six measures of performance using panel data drawn from the United Kingdom's (UK) non-life insurance industry. We find that collectively, financial experts have a beneficial influence on the performance outcomes of insurers. We also observe that board-level qualified accountants and actuaries are linked with superior performance in all six of our selected financial outcome measures. Professional insurance underwriters are associated with sound solvency levels (low leverage) and underwriting results, but not positive earnings-based measures. This suggests that underwriters may not be as adept at group-level earnings enhancement as accountants and actuaries. Additionally, we find that the introduction of IFRS 4 in 2004/5 did not have a significant impact on board composition and financial outcomes. Finally, we consider that our results could have commercial and/or policy implications.

KW - Insurance

KW - boards of directors

KW - Financial Experts

KW - UK

U2 - 10.1177/0148558X17705201

DO - 10.1177/0148558X17705201

M3 - Article

JO - Journal of Accounting, Auditing and Finance

T2 - Journal of Accounting, Auditing and Finance

JF - Journal of Accounting, Auditing and Finance

SN - 0148-558X

ER -