D&O Insurance and Firms’ Environmental Information Disclosure: Evidence from China

Yuliang Zhao and Xiandong Yang

Emerging Markets Finance and Trade, 2025, vol. 61, issue 2, 476-492

Abstract: This study analyzes the impact of directors’ and officers’ liability (D&O) insurance on firms’ environmental information disclosure quality. Our findings demonstrate that D&O insurance improves environmental information disclosure quality, which aligns with the governance hypothesis. We ensured the reliability of our results by controlling for endogeneity; our results remained consistent across alternative measures and specifications. This effect is particularly pronounced in state-owned enterprises and firms without prior environmental penalties, financial restatements, or audits conducted by the top 10 accounting firms. This study provides important practical implications, suggesting that purchasing D&O insurance significantly enhances enterprises’ level of environmental governance.

Date: 2025
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DOI: 10.1080/1540496X.2024.2391321

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