As financial institutions whose business is the acceptance and management of risk, insurers are expected to have sound governance practices and effective risk management systems. The nature of their business activities requires insurers to be subject to tailored guidance on their risks and...

This paper proposes a theoretical model that incorporates corporate governance into the basic CAPM, where corporate governance affects the disutility of managerial effort and the possibility of managers to divert company resources. It shows that corporate governance affects firms’ stock...