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美國產險業
CEO
更迭與再保險需求
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financing policy changes when CEO turnover occurs because of poor performance (e.g.,
Weisbach, 1988; Ofek, 1993; Perry, 2000; Huson et al., 2001; John et al., 2008; Adams and
Mansi, 2009; He and Sommer, 2011).
It is interesting to examine whether insurers with CEO turnover would change their
risk-taking behavior such as reinsurance decision. Insurers with CEO turnover may purchase
less reinsurance because new CEOs may desire increased retention to reduce reinsurance
costs and increase profitability. On the contrary, new CEOs may want to purchase more
reinsurance to transfer their firms’ risk to reinsurers. We believe that new CEOs want to be
more conservative because they do not have track records as CEOs with the company and
the board. If some huge unexpected losses occurred, the board may blame new CEOs for
their reinsurance decisions. Based on the two conflict arguments, we suggest the existence of
a relation between CEO turnover and reinsurance demand, but the sign cannot be predicted.
This leads to the following null hypothesis:
Hypothesis 1: Insurers with CEO turnover are not likely to change their reinsurance
policies after CEO turnover.
2.2 Routine CEO Turnover, Non-Routine CEO Turnover and Reinsurance Demand
We develop a hypothesis related to routine and non-routine CEO turnover.
6
CEO
turnover may affect firm performance post-turnover (e.g., Denis and Denis, 1995; Huson et
al., 2001). For example, Huson et al. (2001) find a significant and positive relation between
non-routine CEO turnover and operating rate of return on total assets post-turnover. They
suggest that the presence of noticeable performance improvements due to managerial quality
enhancement is observed compared to before, when the firms’ board composition is
dominated by outside directors and incumbent CEOs are outsiders. In addition, Weisbach
(1988) and Borokhovich, Parrino, and Trapani (1996) show that non-routine CEO turnover
are more likely than routine CEO turnover to dismiss poorly performing CEOs, replaceing
them with executives who will improve corporate value. The empirical evidence from stock
returns after CEO turnover indicates that shareholders benefit from non-routine CEO
turnover, but suffer larger negative abnormal returns from routine CEO turnover
(Borokhovich et al., 1996). It is implied that non-routine new CEOs may have strong
6 Following the definition of routine and non-routine CEO turnover from Kang and Shivdasani (1995) and
He and Sommer (2011), a non-routine CEO turnover is defined as a change in the CEO of the firm if the
departing CEO is not on the board of directors; other turnover are defined as routine CEO turnover.