Directors’ and Officers’ Liability Insurance and Corporate Idiosyncratic Risk
These authors contributed equally.
- 10.2991/assehr.k.211209.194How to use a DOI?
- directors’ and officers’ insurance; corporate idiosyncratic risk; corporate governance
We examine the effect of directors’ and officers’ insurance (D&O insurance) on corporate idiosyncratic risk in the Chinese market. We find that D&O insurance in China is negatively associated with corporate idiosyncratic risk. This association is robust to a series of robustness checks, including propensity score matching procedure and the inclusion of some possibly omitted variables. Further analyses show that only the idiosyncratic risk of the state-owned enterprises (SOE) can be significantly affected by the purchase of D&O insurance. Moreover, we find that the impact of D&O insurance on idiosyncratic risk is more pronounced in firms with Big 4 auditors, higher analyst coverage, and higher growth rate. Our findings support the notion that D&O insurance appears to improve corporate governance and provide a new understanding of the effectiveness of D&O insurance in emerging economies.
- © 2021 The Authors. Published by Atlantis Press International B.V.
- Open Access
- This is an open access article under the CC BY-NC license.
Cite this article
TY - CONF AU - Shan Huang AU - Muhan Shi AU - Chengyi Shi AU - Zecheng Xu AU - Haoran Xu PY - 2021 DA - 2021/12/15 TI - Directors’ and Officers’ Liability Insurance and Corporate Idiosyncratic Risk BT - Proceedings of the 2021 3rd International Conference on Economic Management and Cultural Industry (ICEMCI 2021) PB - Atlantis Press SP - 1204 EP - 1212 SN - 2352-5428 UR - https://doi.org/10.2991/assehr.k.211209.194 DO - 10.2991/assehr.k.211209.194 ID - Huang2021 ER -