The Nexus Between Corporate Governance, Risk Management, and Insurer Performance in Nigeria: A Simultaneous Equations Approach

This dissertation examines the interdependent relationships among corporate governance quality, enterprise risk management (ERM) sophistication, and insurer financial performance in Nigeria using a simultaneous equations framework that accounts for the endogenous nature of governance, risk management, and performance decisions. Existing studies on the governance-performance relationship in insurance companies treat governance as an exogenous determinant of performance, ignoring the feedback effects through which performance outcomes shape governance investment decisions and the mediation role of risk management practices. This limitation produces biased estimates of governance effects in cross-sectional and simple panel regression frameworks. This study constructs a three-equation simultaneous system in which corporate governance (measured by board composition, ownership concentration, and audit quality indices), ERM sophistication (measured by a novel Nigerian Insurance ERM Maturity Index developed and validated in this study), and financial performance (measured by ROA, ROE, and risk-adjusted return) are jointly determined. A panel of twenty Nigerian insurance companies from 2012 to 2023 provides the estimation dataset. The three-stage least squares (3SLS) estimator addresses simultaneity bias, and identification is achieved through carefully selected exclusion restrictions. Heterogeneity analysis assesses whether governance-ERM-performance relationships differ between life and non-life insurance companies. Keywords: Corporate Governance, Enterprise Risk Management, Insurer Performance, Simultaneous Equations, Nigeria.