Board Leadership Structure of Publicly‐Traded Insurance Companies

CEO duality is a contentious issue driving much debate amongst regulators and business leaders. It is also an aspect of corporate governance, to which insurance companies have made significant changes in recent years. Despite its significance, we know little about the determinants of CEO duality in the insurance industry and its impact on firm performance. This paper addresses these research questions. We find strong evidence that CEO duality is a complex decision, which insurance firms fine-tune in response to their individual circumstances. Compared to other industries, the insurance industry is unique in that the costs and benefits of CEO duality vary more with firm size. We find no evidence that CEO duality is detrimental to firm performance. If anything, the valuation impact of CEO duality appears to be positive for large insurers. Our results have important policy implications. Evidence suggests that regulatory initiatives targeting CEO duality of insurance firms should pay close attention to the role of firm size. It may also be desirable to promote regulations that can provide insurance companies decision flexibility in adjusting their leadership structures to competitive environments.