An Investigation About Corporate Governance Effect on the Efficiency of the Iranian Insurance Industry

The purpose of this paper is to assess the impact of corporate governance mechanisms on the Iranian insurance industry’s performance using Data Envelopment Analysis (DEA) model. First, using DEA approach, we determine the efficiency of companies considering input variables (Administrative and agent labors, equity capital and general and administrative expenses) and output variables (incurred losses and price of intermediation). Then, by calculating corporate governance mechanisms, through the bootstrap regression model, we have addressed the impact of each mechanism on the efficiency of the insurance industry. In this study, we consider fourteen insurance companies which are selected based on systematic removal method and their efficiency determined according to Anderson & Peterson method. According to the information obtained from the Average Performance Score of companies in the six-year period (2010-2015), there are evidences of fluctuations in the efficiency of the industry. In addition, our findings indicate that corporate governance affected the efficiency of these companies. Among corporate governance mechanisms, board size, board independence and financial expertise have a significant positive effect on the efficiency of the insurance industry.