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Tuesday, August 3 • 10:45am - 12:15pm
4D1 Board Composition, Ownership Structure, and Cash Holdings: Evidence from the US Property-Casualty Insurance Industry

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Lih Ru Chen, USC

This study examines the effectiveness of internal corporate governance mechanisms on firm cash holdings in the U.S. property casualty insurance industry from 2007 to 2015. We focus on the impact of outside directors on the cash holdings in relation to the ownership structure in the U.S. insurance industry. We examine whether the independence of board of directors and ownership structure are effective internal corporate governance mechanisms in eliminating agency conflicts between owner and managers over cash holdings. The results will confirm whether independent board members play a role in monitoring managers’ spending behavior. Additionally, we investigate whether stock insurance firms have comparative advantage in eliminating agency conflicts between owner and managers over cash holdings than mutual insurance firms. This study will also examine whether board composition and ownership structure are substitute control mechanisms in eliminating agency conflicts over excess cash holdings.

Discussant
avatar for Andre Liebenberg

Andre Liebenberg

University of Mississippi

Presenters
LR

Lih Ru Chen

Assistant Professor, Shih Chien University



Tuesday August 3, 2021 10:45am - 12:15pm EDT