Drawing a framework from stakeholder theory, this study uses 1994 data drawn from 100 United Kingdom listed companies to test empirically whether the level of discretionary donations made by companies to charitable, social and political causes is related to four company-speci®c factors, namely leverage, company size, pro®tability and ownership structure. Consistent with our hypotheses, the results indicate that the decision to contribute funds to charities and other bodies is positively related to company size and pro®tability and negatively related to leverage. However, the study provides no support for the view that there is a link between discretionary donations and a company's ownership structure.

This paper examines the effects of corporate governance mechanisms (measured by a set of board characteristics) on the profit efficiency of United Kingdom (UK) life insurance firms. A parametric 'stochastic frontier' approach is used to compute profit efficiency scores and second-stage regression models are estimated to test the influence of governance mechanisms on these efficiencies. We find that, viewed in isolation, board characteristics tend to have little effect on firm efficiency in the UK life insurance market. However, we do find that the proportion of non-executive directors on the board exhibits a significant effect on the profit efficiency of our sample UK insurers once the interaction effects among governance mechanisms are taken into account. The effect can be either positive or negative depending on whether there is separation of the CEO and board chairman positions and whether there is an audit committee. These results suggest that corporate governance is an inherently complex process and it is problematical to evaluate the effectiveness of an individual governance mechanism on a firm's economic performance. Insurers' profit efficiency is also negatively related to risk proxies and exhibits a concave relation with firm size.

This paper examines the determinants of external credit ratings attained by insurance firms in the United Kingdom (UK) and of the likelihood that insurers will have such an assessment. Using panel data relating to A.M. Best‐rated and Standard and Poor's (S&P)‐rated insurers over the period 1993–1997, a trichotomous logit model and an ordered probit model with sample selection are employed to show that the factors which influence the likelihood of having external credit assessments not only vary between the two agencies but also differ from those which determine the ratings themselves. Our results are shown to be of potential interest to participants in the insurance industry and policy‐makers alike.