Earnings Management Surrounding Forced CEO Turnover: Evidence from the U.S. Property-Casualty Insurance Industry

2018 ◽  
Author(s):  
Jiang Cheng ◽  
J. David Cummins ◽  
Tzuting Lin
Keyword(s):  
Earnings Management ◽  
Insurance Industry ◽  
Ceo Turnover ◽  
The U.S ◽  
Property Casualty

scholarly journals Corporate governance, audit quality and risk taking in the U.S. property casualty insurance industry

2009 ◽  
Vol 7 (1) ◽  
pp. 84-95 ◽  
Author(s):  
Chia-Ling Ho ◽  
Gene Lai ◽  
Jin-Ping Lee
Keyword(s):  
Corporate Governance ◽  
Risk Taking ◽  
Audit Quality ◽  
Net Present Value ◽  
Insurance Industry ◽  
Deep Understanding ◽  
Sarbanes Oxley ◽  
The Impact ◽  
The U.S ◽  
Property Casualty

This paper examines the impact of corporate governance and audit quality on risk-taking in the U.S. property casualty insurance industry. The evidence shows that some corporate governance variables, as well as some audit quality variables are related to risk-taking. We find that longer board tenure is associated with low underwriting risk. But the higher percentage of financial experts on the board is associated with high underwriting risk. The possible reason is that financial experts possess a deep understanding of a firm’s financial situation and may encourage the management to take higher risk in anticipation of a higher return for a positive net present value project. The results are consistent with agency theory and wealth transfer hypothesis in that high risk taking is consistent with shareholder interest maximization. In addition, we find a non-monotonic relation between insider ownership and leverage risk. Finally, we do not find evidence that the Sarbanes-Oxley act have impact on the risk taking behavior.

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