An Empirical Study On The Relationship Between Small Life Insurance Company's Corporate Governance And Corporate Performance

As the reform and opening up become deepening and the development of financial market in our country, corporate governance become one of the main concerns of stakeholders. Sound corporate governance can increase competitiveness and can make enterprises stable. It also can do favor to small life insurance companies.In recent years, China's economic has been developed rapidly, which influenced the insurance market positively. Nowadays, the insurance regulatory commission in China regulates corporate governance structure of the insurance companies strictly. However, does the formal corporate governance structure can really make a positive impact on corporate performance?In 2006, the Insurance Regulatory Commission (CIRC) issued the "governance structure of insurance companies on the specification guidance (draft), " and a series of documents on corporate governance later, Nowadays, the insurance regulatory commission in China regulates corporate governance structure of the insurance companies strictly. However, does the formal corporate governance structure can really make a positive impact on corporate performance?In this paper, the author set small life insurance companies as research object and learn from the research of the scholars abroad. The author analysis the influence of the corporate governance to the corporate performance empirically, tries to find the problems and gives some advices to the corporate governance of the small life insurance companies in our country through empirical data.In empirical research, this paper defined corporate governance as explanatory variable, select the proportion of largest shareholder, the proportion of the top five shareholders, the board size, the proportion of independent directors, the number of the board of supervisors and the number of representative variables of corporate governance. And this paper defined corporate performance as the dependent variable. We selected the asset-liability ratio, ROE, lapse rate and total assets growth rate to be the representatives of solvency requirements, profitability, operational capacity and the growth ability.Though the research, we founded that the small life insurance company's corporate governance structure have some impact on the corporate governance. The largest shareholder's proportion have a positive impact on ROE and lapse rate, and have a negative impact on the asset-liability rate and total asset growth rate. The top five shareholder's proportion has a positive impact on asset-liability rate, and has a negative impact on lapse rate. The board size has no significant impact on corporate performance. The proportion of independent board has a positive impact on asset-liability ratio, have a negative impact on ROE, and have no significant impact on total assets growth rate and lapse rate. The number of board of supervisors has a positive impact on ROE, have no significant on asset-liability ratio, total assets growth rate and lapse rate. Executives have no significant impact on ROE, asset-liability, total assets growth rate and lapse rate.The above conclusion shows that the corporate governance constitutions of the small life insurance companies have been not fully play their roll. The reasons are:First reason is ownership structure. The degree of ownership concentration is too high in china's life insurance companies. The second reason is board of directors. Shareholder's power is too large, that made it difficult for other shareholders to form the largest shareholder effective checks and balances; The third reason is that the board member lack of the professionalism and independence, so does the board of supervisors. The last one is that the company executives do not play in the management of the proper role. There may exists internal control which affects performance.The main innovation is:first, in insurance, an emerging field, this paper summing up and learning from other scholars, selected multiple indicators of corporate governance analysis. Second, on the basis of the specificity of the small life insurance company, combined with china's financial environment, this paper selected the appropriate indicators of corporate performance to study. This can be more real and reliable to reflect the actual situation of small life insurance companies.The disadvantages of this paper are:First, many small life insurance companies have set up for only a short time, the author only selected the 2009 Statistical Yearbook of the insurance for the data, the data is too small;Second, the concept of corporate governance only refers to the common condition;Third, the study of this paper only concerns the small life insurance companies, which can not corticated the condition of all the life insurance companies.