EconPapers    
Economics at your fingertips  
 

Does size and book-to-market contain intangible information about managerial incentives? Learning from corporate D&O insurance purchase

Rachel Huang (), Vivian Jeng, Cheng-Wei Wang and Jack C. Yue

Pacific-Basin Finance Journal, 2021, vol. 68, issue C

Abstract: Using 2008–2018 data for all publicly-listed firms in Taiwan, this paper tests for asymmetric information in the Directors' and Officers' (D&O) liability insurance market. We argue that size and book-to-market ratio contain information such as managerial risk preferences and their intention to reduce litigation risk. Our results show that a negative relationship exists between litigation risk and insurance purchase among small and low book-to-market firms. Our findings pinpoint out the importance of using size and the book-to-market ratio when detecting asymmetric information in the corporate level.

Keywords: Size; Book-to-market; Directors' and officers' liability insurance; Advantageous selection; Intangible information; Adverse selection (search for similar items in EconPapers)
JEL-codes: C30 D80 G22 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0927538X21000676
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:pacfin:v:68:y:2021:i:c:s0927538x21000676

DOI: 10.1016/j.pacfin.2021.101560

Access Statistics for this article

Pacific-Basin Finance Journal is currently edited by K. Chan and S. Ghon Rhee

More articles in Pacific-Basin Finance Journal from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2022-05-05
Handle: RePEc:eee:pacfin:v:68:y:2021:i:c:s0927538x21000676