EconPapers    
Economics at your fingertips  
 

Is corporate governance risk valued? Evidence from directors' and officers' insurance

M. Martin Boyer () and Léa H. Stern

Journal of Corporate Finance, 2012, vol. 18, issue 2, 349-372

Abstract: We find that common equity firms pay lower D&O insurance premiums than income trusts, an alternative and riskier ownership form. This result has wide-ranging implications for investors insofar as the information provided by D&O insurers provides investors with an unbiased signal of the firm's governance risk. The signal is unbiased because it comes from an entity (i.e. the insurer) that has a direct financial incentive to correctly assess an organization's governance risk, in contrast to other ad hoc governance measures and indices.

Keywords: Corporate governance; D&O insurance; Initial public offerings; Income trusts (search for similar items in EconPapers)
JEL-codes: G34 G22 J44 G32 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0929119911001465
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:18:y:2012:i:2:p:349-372

DOI: 10.1016/j.jcorpfin.2011.12.005

Access Statistics for this article

Journal of Corporate Finance is currently edited by A. Poulsen and J. Netter

More articles in Journal of Corporate Finance from Elsevier
Bibliographic data for series maintained by Haili He ().

 
Page updated 2020-05-02
Handle: RePEc:eee:corfin:v:18:y:2012:i:2:p:349-372