Directors’ and officers’ liability insurance and corporate misconduct: Evidence from China

Kedi Wang and Chen Wu

Applied Economics, 2023, vol. 55, issue 20, 2349-2365

Abstract: This study examines whether directors’ and officers’ liability insurance (D&O insurance) plays a governance role in the Chinese capital market. We hypothesize and find that D&O insurance restrains corporate misconduct and that this phenomenon is much more significant in state-owned enterprises (SOEs) than in non-state-owned enterprises (non-SOEs). We think purchasing of D&O insurance can import supervisors to mitigate agency costs caused by owner absence. When agency costs are high, SOEs with D&O insurance experience less corporate misconduct. Our study also finds that when the agency problem caused by owner absence is more serious in SOEs, the role of D&O insurance in corporate governance becomes increasingly important.

Date: 2023
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://hdl.handle.net/10.1080/00036846.2023.2186363 (text/html)
Access to full text is restricted to subscribers.

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:taf:applec:v:55:y:2023:i:20:p:2349-2365

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAEC20

DOI: 10.1080/00036846.2023.2186363

Access Statistics for this article

Applied Economics is currently edited by Anita Phillips

More articles in Applied Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().