Research On The Effect Of Internal Governance On Risk-taking Of Domestic Insurance Companies

With the speeding up of the financial globalization, the risks of the insurance industry are growing, and its complexity is becoming higher. Good corporate governance is designed to improve the overall risk management of insurance companies, and promote the healthy and orderly development of financial industry, is an important guarantee of social economic system’s stable operation. Once fail to govern the risk to the company, will most likely lead to industry crisis, and even cause the financial crisis.This paper is based on the literature review of corporate governance theory and the relationship among the particularity of insurance company governance, the performance of an insurance company and the risk taking, using the cross-section data of more than60Chinese insurance companies in2012. By building a model of regression analysis of data, discussing the internal governance factors to our country the influence of the Chinese insurance company risk, we will get the empirical research results, and access to the various influence factors of larger risk information, eventually to provide the reference to improve the insurance company internal governance mechanism in our country.At present, there are a lot of literatures on the effects of corporate governance on firm’s performance. But as far as the relationship between corporate governance and risk taking of the financial industry is studied less, especially alone with the insurance company as the analysis object of the research is rare. Therefore, using the Chinese insurance companies as the research object, discussing the influence of the relationship between the elements of the internal governance and the insurance company’s risk taking, has a novel perspective and with great research value.By analyzing the existing literature, this paper expounds the relevant theories of insurance company’s corporate governance, especially the current foreign scholars and Taiwan scholars’research on the relationship between corporate governance and the risk taking, research on the relationship between the corporate governance and risk bearing. According to the internal governance information about2012disclosed by the Chinese insurance company, this paper collects a lot of information, including the proportion of the first largest shareholder, the total number of the number of the board of directors and outside directors, the proportion of independent directors, and the number of independent directors who have experience in financial experience, the number of the professional committee of the board and the board of directors with government background, the size of the board of supervisors, whether or not to set up the remuneration and appraisal committee, and if the chairman of the board concurrently be the general manager and so on. Using the referred information as the explaining variable of the internal governance mechanism, through the model building, we can empirically analyze the influence of the internal governance on the insurance companies’risk taking. In order to improve the accuracy of analysis, this paper has taken the company scale into account as a control variable. Finally, according to the different influence of the various factors on the risk taking, promoting or hindering the relationship to perfect the internal governance of the insurance company, we will give some effective suggestions.The article is divided into six parts:Chapter one is mainly about the background, the importance of this topic, the research object and the overall innovation and deficiency and so on. Chapter two introduces the relevant concepts and theories of corporate governance. Chapter three gives the measurement of insurance company’s corporate governance, and talks about the insurance company’s risk taking. Chapter four analyzes the internal governance factors’ impact on the insurance company’s risk taking in theory in four angles. Chapter five, as the research emphasis of this paper, through the model building, chooses different risk index and undertakes the regression analysis of the internal governance factors on the influence of different risks. And in Chapter six, we get the conclusions and put forward to some suggestions.In this paper, the innovation points mainly include as the following:Firstly, the novel research perspectives. This paper not only studies the relationship between the elements of the insurance company’s internal governance and the insurance company’s overall risk taking, and further studies the relationship between the elements of internal governance and the main special risk faced by insurance company of different business types, thus helps to run targeted risk control measures for different business types of insurance companies, provides theoretical basis for improve the level of insurance industry overall risk control.Secondly, the research content is novel. Different from the previous studies, which mainly discusses the elements of internal governance’s influence on insurance company risk bearing, this paper emphatically discusses the elements of internal governance’s impact on insurance company’s investment risk and property insurance.Thirdly, sample selection is of comprehensiveness and timeliness. In this paper, we take the Chinese insurance companies as research object, given the availability of the data, finally we use62insurance companies’ data disclosed in the2012annual report as samples.