Examining the D&O insurance effect on managerial ability

Feng-Yi Lin, Liming Guan, Chia-Ling Ho and Teng-Shih Wang

Finance Research Letters, 2022, vol. 46, issue PA

Abstract: This research investigates the relation between directors’ and officers’ insurance (hereafter, D&O insurance) and managerial ability. Using data from the Taiwan capital markets from 2011 to 2017, we find that D&O insurance increases managerial ability and show that the effect of D&O insurance on managerial ability is more prevalent when a firm is in the following situations: 1) CEO is in the early stage of tenure, 2) the firm belongs to a family-controlled group, and 3) the firm has higher environmental uncertainty. Finally, our study shows that D&O insurance strengthens the relation between managerial ability and firm performance.

Keywords: D&O insurance; Managerial ability; Firm performance (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:46:y:2022:i:pa:s1544612321003317

DOI: 10.1016/j.frl.2021.102297

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