Do board and audit governance matters for insurer performance? A meta-analytical review

Abstract

Amassing a dataset of 32 empirical studies published between 2003 and 2021, the article metaanalyzes the effect of board and audit governance on insurer performance. Utilizing the Schmidt and Hunter (2015) approach, it also investigates whether variations in findings are attributable to definitions of governance variables, performance measures, corporate governance systems, endogeneity issues, and publication quality. The study particularly focuses on four board (board size, outside directors, CEO duality, and board meetings) and three audit attributes (presence of an audit committee, its size, and independence). The results show that outside directors and the audit committee presence significantly improve insurer performance. However, board size and duality hold a positive influence only in Anglo-American economies. The study advocates that simply occupying the insurer’s board with outside directors is insufficient. Instead, they should be ‘‘operationally independent’’ for the effective functioning of the insurers’ boards. Our study recommends implementing distinct governance norms for insurers aligned with the country’s internal environments instead of reproducing a common set of practices.