Overinvestment, ownership structure, and directors' and officers’ liability insurance

Yao-Min Chiang and Pang-Ru Chang

International Review of Economics & Finance, 2022, vol. 78, issue C, 38-50

Abstract: This study examines the moderator effect of directors' and officers’ liability insurance (D&O insurance) on the relationship between ownership structure and overinvestment. We find that firms with D&O insurance and higher insurance coverage have a higher probability of overinvestment. These results show the D&O insurance is like a moral hazard effect. We also find evidence that the relationship between ownership structure and overinvestment is affected by D&O insurance. As well as the results support that the firms purchasing D&O insurance is moderator effect on ownership structure and overinvestment.

Keywords: Overinvestment; Ownership structure; Directors's and officers' liability insurance (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:78:y:2022:i:c:p:38-50

DOI: 10.1016/j.iref.2021.11.002

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