Directors’ and officers’ liability insurance and carbon emissions

Qianyi Wang, Xinyi Lou and Zhan Wang

Finance Research Letters, 2024, vol. 69, issue PA

Abstract: As climate-related issues become more serious, companies face mounting pressure to promote environmental governance. In this study, we examine companies’ carbon emissions behavior from the perspective of corporate risk-taking. Analyzing China's company-level carbon emissions data from 2011 to 2021, we find that firms with directors’ and officers’ liability insurance (D&O insurance) have higher carbon emissions intensity. We then find that the D&O insurance–carbon emissions relationship exists among firms not involved in litigation in the previous year. Furthermore, this relationship becomes more pronounced when companies are under financial distress or have a higher number of analysts following them. Our results support the argument that companies with high risk-taking capacity exhibit greater polluting behavior.

Keywords: D&O insurance; Carbon emissions; Risk-taking (search for similar items in EconPapers)
JEL-codes: G22 G30 G34 M14 Q54 Q56 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:69:y:2024:i:pa:s154461232401167x

DOI: 10.1016/j.frl.2024.106138

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