Chair-CEO age variation and insurance risk-taking behavior

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Abstract

Based on data of all listed insurance companies in Jordan over the period of 2008-2018, the study investigates the effect of chairman of the board of directors (chair) and chief executive officer (CEO) age variation on risk-taking behavior via different chair-CEO age variation proxies. Risk-taking behavior is measured by total risk, a proxy set up on the market’s risk perception. Thus, the study finds evidence that the chair-CEO age variation tends to decrease risk-taking practice in Jordan’s insurance companies, only if a generation gap exists. It doesn’t matter whether the chair or CEO is older. These results are consistent with Goergen, Limbach, and Scholz (2015) and Zhou, Kara, and Molyneux (2019). Different robustness tests (CEO-firm fixed effect, random effect, and dynamic panel estimation) confirm results. Overall, this study contributes to corporate governance literature; thus, enhancing the internal corporate governance mechanism is essential. Finally, it has a practical implication for stakeholders, policymakers, and researchers.

Keywords: Chair-CEO Relationship, Risk-Taking Behavior, Age Variation, Insurance Companies, Jordan

Authors’ individual contribution: The Author is responsible for all the contributions to the paper according to CRediT (Contributor Roles Taxonomy) standards.

Declaration of conflicting interests: The Author declares that there is no conflict of interest.

JEL Classification: G3, G22, G28

Received: 02.12.2020
Accepted: 29.01.2021
Published online: 01.02.2021

How to cite this paper: Daradkah, D. (2021). Chair-CEO age variation and insurance risk-taking behavior. Journal of Governance & Regulation, 10(1), 49-57. https://doi.org/10.22495/jgrv10i1art6