A Governance Study of Corporate Ownership in the Insurance Industry

This study focuses on family control and ownership patterns in the U.S. insurance industry. Conflicting theories argue that family firms perform worse due to nepotism and weak risk-bearing attributes (Agency theory) or that family firms perform better because the unity of ownership and control reduces agency expenses (Stewardship theory). Our findings support the Stewardship view of the firm. Our findings also demonstrate that CEO-Chairperson duality improves performance but that the combination of family and duality is sub-optimal. We further study implications of institutional investor and insider ownership, compensation structure, and leverage on performance.