The Effects of Ownership Concentration on Managerial Discretion of the Non-Life Insurance Businesses in Thailand
DOI:
https://doi.org/10.58837/CHULA.CBSJ.45.2.2Keywords:
Ownership Concentration, Insurance Business, Managerial DiscretionAbstract
Intrigued by managerial discretion's vital role in Thailand's non-life insurance businesses, this study embarks on a compelling investigation into the interplay between ownership concentration and decision-making autonomy. Collected with the utmost care from diverse sources such as the Stock Exchange of Thailand (SET), the Office of Insurance Commission (OIC), and the Department of Business Development (DBD), the financial and ownership data form a robust foundation for our analysis, ensuring unwavering data integrity. The study scrutinizes 45 non-life insurance companies operating in Thailand between 2012 and 2016, revealing a captivating insight - the ownership structure is a linchpin in shaping managerial discretion. The findings illuminate an alluring inverted U-shaped relationship between ownership concentration and managerial discretion. When owners focus intensely on their enterprises, the discretion of managers experiences a decline, unveiling the delicate balance governing corporate decisions. However, the narrative takes an intriguing twist as owners exceed the optimal share threshold, triggering a surge in managerial discretion. This study's fascinating results shed light on the potential agency conflicts between owners and policyholders, offering valuable insights into the entrenchment behavior linked to Agency theory. With its fresh perspective on the dynamics between ownership and discretion, this research inspires a reevaluation of corporate governance practices within the non-life insurance sector, piquing the curiosity of industry insiders and researchers alike.
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