Boardroom gender diversity and risk-taking in the insurance industry: do organizational form and ownership structure matter?
ISSN: 1472-0701
Article publication date: 14 August 2023
Issue publication date: 16 February 2024
Abstract
Purpose
This study aims to investigate the relationship between boardroom gender diversity (BoGD) and risk-taking by property-liability (P-L) stock insurers from an analytical framework that control for organizational form and ownership structure. It relies on the behavioral agency model, the resource dependency theory and the concept of socioemotional wealth (SEW).
Design/methodology/approach
This study builds on an unbalanced panel of 2,285 firm-year observations from 232 European and US P-L stock insurers covering the period 2010–2019 and measure risk-taking by using four proxies: total risk (TR), upside risk (UpR), downside risk (DwR) and default risk (DR). Reverse causality and endogeneity concerns are treated by applying different approaches.
Findings
Findings suggest that BoGD mitigates the TR, DwR and DR but does not interfere with the UpR, which conceptualizes firm expectations to enhance patrimony and safeguard SEW for heirs, especially in family-owned insurers. The findings hold in various robustness checks including endogeneity and alternative specifications of BoGD and risk-taking.
Practical implications
This study contributes to practice by contrasting the role of female directors’ bevahior when assuming risk, which seems significantly different depending on the risk-taking specification and the organizational form. The author advises policyholders and policymakers to look at closely on BoGD and ownership structure as they affect insurance company risk-taking.
Originality/value
This study takes a more direct approach to highlight the BoGD’s effect on corporate risk-taking by focusing on the insurance sector which is characterized by risk and uncertainty bearing. To the best of the author’s knowledge, this is the first study to consider the full range of the stock organizational forms and the degree of family control in displaying this effect in both widely traded and closely traded insurers and to assess risk-taking from both market-based and accounting-based aspects.
Keywords
Acknowledgements
The authors extend their appreciation to the Deanship of Scientific Research, Imam Mohammad Ibn Saud Islamic University (IMSIU), Saudi Arabia, for funding this research work through Grant No. (221411001).
Since the acceptance of this article, the following author(s) have updated their affiliations: Habib Jouber is at the Department of Insurance and Risk Management, Imam Mohammad Ibn Saud Islamic University (IMSIU), Riyadh, Saudi Arabia & LARTIGE, Faculty of Economic and Management Sciences, Sfax University, Sfax, Tunisia.
Competing interest: The author declares that he has no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper.
Data availability statement: The data that support the findings of this study are collected from confidential sources. They are available from the author upon reasonable request.
Citation
Jouber, H. (2024), "Boardroom gender diversity and risk-taking in the insurance industry: do organizational form and ownership structure matter?", Corporate Governance, Vol. 24 No. 2, pp. 278-302. https://doi.org/10.1108/CG-01-2023-0002
Publisher
:Emerald Publishing Limited
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