The governance effects of directors’and officers’liability insurance(D&O insurance),an important tool for risk diversification,are of strong concern in the capital market.Using a sample of Chinese A-share listed...The governance effects of directors’and officers’liability insurance(D&O insurance),an important tool for risk diversification,are of strong concern in the capital market.Using a sample of Chinese A-share listed firms from2009 to 2018,we examine the impact of D&O insurance on excess corporate leverage.We find that D&O insurance is negatively associated with excess corporate leverage and that this result is consistent with a series of robustness tests.Further analyses show that D&O insurance impedes excess corporate leverage mainly because of its effect on external monitoring.The effect is more pronounced for firms that are state-owned,have political connections and are located in provinces with low marketization than for other firms.展开更多
基金supported by the National Social Science Youth Foundation of China(Project No.20CGL014)the Social Science Planning Project in Chongqing,China(Project No.2021BS084)
文摘The governance effects of directors’and officers’liability insurance(D&O insurance),an important tool for risk diversification,are of strong concern in the capital market.Using a sample of Chinese A-share listed firms from2009 to 2018,we examine the impact of D&O insurance on excess corporate leverage.We find that D&O insurance is negatively associated with excess corporate leverage and that this result is consistent with a series of robustness tests.Further analyses show that D&O insurance impedes excess corporate leverage mainly because of its effect on external monitoring.The effect is more pronounced for firms that are state-owned,have political connections and are located in provinces with low marketization than for other firms.
