Proceedings of the 2021 3rd International Conference on Economic Management and Cultural Industry (ICEMCI 2021)

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Directors’ and Officers’ Liability Insurance and Corporate Idiosyncratic Risk

Authors
Shan Huang1, †, Muhan Shi2, †, Chengyi Shi3, †, Zecheng Xu4, †, Haoran Xu5, *, †
1College of Arts and Science, New York University, New York City, 10011, USA
2Dornsife College of Letters, Arts and Sciences, University of Southern California, Los Angeles, 90089, USA
3College of Arts and Science, New York University, New York City, 10011, USA
4College of Arts and Science, Stony Brook University, Stony Brook, New York City,11794, USA
5College of Mechanical Engineering, Zhe Jiang University, Hang Zhou,310013, China
†

These authors contributed equally.

*Corresponding author: Haoran Xu. Email: 3180104450@zju.edu.cn
Corresponding Author
Haoran Xu
Available Online 15 December 2021.
DOI
10.2991/assehr.k.211209.194How to use a DOI?
Keywords
directors’ and officers’ insurance; corporate idiosyncratic risk; corporate governance
Abstract

We examine the effect of directors’ and officers’ insurance (D&O insurance) on corporate idiosyncratic risk in the Chinese market. We find that D&O insurance in China is negatively associated with corporate idiosyncratic risk. This association is robust to a series of robustness checks, including propensity score matching procedure and the inclusion of some possibly omitted variables. Further analyses show that only the idiosyncratic risk of the state-owned enterprises (SOE) can be significantly affected by the purchase of D&O insurance. Moreover, we find that the impact of D&O insurance on idiosyncratic risk is more pronounced in firms with Big 4 auditors, higher analyst coverage, and higher growth rate. Our findings support the notion that D&O insurance appears to improve corporate governance and provide a new understanding of the effectiveness of D&O insurance in emerging economies.

Copyright
© 2021 The Authors. Published by Atlantis Press International B.V.
Open Access
This is an open access article under the CC BY-NC license.

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Volume Title
Proceedings of the 2021 3rd International Conference on Economic Management and Cultural Industry (ICEMCI 2021)
Series
Advances in Economics, Business and Management Research
Publication Date
15 December 2021
ISBN
978-94-6239-483-4
ISSN
2352-5428
DOI
10.2991/assehr.k.211209.194How to use a DOI?
Copyright
© 2021 The Authors. Published by Atlantis Press International B.V.
Open Access
This is an open access article under the CC BY-NC license.

Cite this article

risenwbib
TY  - CONF
AU  - Shan Huang
AU  - Muhan Shi
AU  - Chengyi Shi
AU  - Zecheng Xu
AU  - Haoran Xu
PY  - 2021
DA  - 2021/12/15
TI  - Directors’ and Officers’ Liability Insurance and Corporate Idiosyncratic Risk
BT  - Proceedings of the 2021 3rd International Conference on Economic Management and Cultural Industry (ICEMCI 2021)
PB  - Atlantis Press
SP  - 1204
EP  - 1212
SN  - 2352-5428
UR  - https://doi.org/10.2991/assehr.k.211209.194
DO  - 10.2991/assehr.k.211209.194
ID  - Huang2021
ER  -