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Performance analysis and managerial ability in the general insurance market: a study of India and Iran

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Abstract

Managerial ability and managerial efforts play key role in the performance of business enterprises. However, this indicator is not directly observable. The current paper focuses on estimating managerial ability in the context of the Indian and Iranian general insurance sectors. The study is based on 140 firm-year observations in India and 140 firm-year observations in Iran spread over 7 years (2012–13 to 2018–19). For measuring managerial ability, we have used a three-stage procedure that involves the estimation of insurer-wise efficiency using Data Envelopment analysis (DEA) in the first stage and then regression of the logarithm of technical efficiency on a set of explanatory variables. In the final stage, we have estimated managerial ability from regression residuals (the difference between the observed and fitted values of insurer efficiency). In order to test the validity of the relationship between return on equity and managerial ability we use the general additive model (GAM). Our results confirmed that there is a positive relationship between return on equity and managerial ability. Our findings also revealed that the mean technical and output allocative efficiencies and managerial ability of Iranian markets highly fluctuated with a high variance. In contrast, these indicators did not fluctuate much in India.

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Acknowledgements

The authors would like to thank the Editor-in-Chief, Associate Editor, and anonymous reviewers for their helpful comments on the previous version of this manuscript.

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Authors and Affiliations

  1. Merves Chair in Accounting and Information Technology, Fox School of Business, Temple University, Philadelphia, USA

    Rajiv. D. Banker

  2. Faculty of Engineering and Natural Sciences, Istinye University, Istanbul, Turkey

    Alireza Amirteimoori & Tofigh Allahviranloo

  3. Government College of Engineering and Leather Technology, Kolkata, West Bengal, 700106, India

    Ram Pratap Sinha

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  1. Rajiv. D. Banker
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  2. Alireza Amirteimoori
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  3. Tofigh Allahviranloo
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  4. Ram Pratap Sinha
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Correspondence to Alireza Amirteimoori.

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Banker, R.D., Amirteimoori, A., Allahviranloo, T. et al. Performance analysis and managerial ability in the general insurance market: a study of India and Iran. Inf Technol Manag 25, 19–31 (2024). https://doi.org/10.1007/s10799-023-00405-y

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