Saule Dyussembina,
KIMEP University, Kazakhstan
s.dyussembina@kimep.kz
and
Aspandiyar Nurimanov,
Frankfurt School of Finance and Management, Germany
aspandiyar.nurimanov@fs-students.de

Abstract: This study investigates the relationship between selected characteristics of boards of directors—namely, size and percentage of independent directors—and the profitability of insurance companies in Kazakhstan, over the period 2012-2018.

This research uses monthly data on financial performance from the statistics published by the National Bank of Kazakhstan. The data on the boards’ composition were hand collected from the files of the Depository of the Financial Reporting of the Ministry of Finance of Kazakhstan, and from the Kazakhstan Stock Exchange. The research uses panel data estimation with firm and time fixed effects. To mitigate endogeneity, generalized method of moments is applied.

The results show that board size relates negatively to the insurance companies’ profitability, but it has a statistically significant positive association with the return on assets (ROA) during times of negative profits. The percentage of independent directors on boards does not show any significant association with profitability measures.

The results suggest that firms should be more efficient in using governance instruments and facilitate involvement of independent directors. Regulators should pay more attention to corporate governance reforms, especially in emerging markets.

JEL Classifications: M12, M14

Keywords: Firm Performance, Corporate Governance, Board of Directors, Independent
Directors, Insurance Firms, Emerging Markets, Kazakhstan

Download article