Developing a Corporate Governance Index in the UK, A Necessary Panacea for the Insurance Industry?

Authors: Abdoush, T.

Start date: 11 June 2018

The objective of this study is to assess whether the newly built UK Corporate Governance Index (UKCGI), which has been developed by the researcher, indicates any association between governance structure and firm performance in the UK life and non‐life insurance companies, both listed and nonlisted, during the period 2004‐2013. The sample started in 2004 after the Financial Reporting Council (FRC) had released the UK corporate governance code in 2003, and ended in 2013, since this was the most recent year for which data was available at the time of data collection. To the best of the researcher’s knowledge, this study has been the first study to investigate the relationship between an aggregated measure of corporate governance and firm performance of both listed and non‐listed insurance companies in the UK. A regression analysis was run between our corporate governance index and firm performance in order to explore any relationship between this index or any of its five sub‐indices and firm performance. The main findings indicated a significant association between the new corporate governance index (UKCGI) and firm performance, suggesting that our index is sensitive to the changes in corporate governance that leads to improved firm performance.

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