The effect of directors' and officers' liabilities insurance on corporate social responsibility evidence from China

Qingbin Meng, Song Wang and Ziya Zhong

International Review of Financial Analysis, 2024, vol. 93, issue C

Abstract: Using the sample of Chinese publicly listed companies from 2008 to 2018, we find that the firms whose managers are covered by Directors' and Officers' Liabilities Insurance (D&O insurance) are more likely to have better performance in their corporate social responsibility (CSR) activities. The effect of D&O insurance on CSR is more pronounced when the surrounding insurance industry is more active, when the corporate governance is weaker, and when the external monitoring is less sufficient. Moreover, when D&O insurance is at presence, CSR activities can affect the firm's operating performance more effectively and positively. Overall, our results suggest that D&O insurance can be positively aligned with the shareholders' interests in promoting CSR.

Keywords: Corporate social responsibility; Directors' and officers' liabilities insurance; Corporate governance (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:93:y:2024:i:c:s105752192400108x

DOI: 10.1016/j.irfa.2024.103176

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