Directors’ and Officers’ Liability Insurance, Risk Taking, and Corporate Strategic Deviation
Journal Title: Journal of Organizations, Technology and Entrepreneurship - Year 2023, Vol 1, Issue 2
Abstract
Directors’ and Officers’ (D&O) liability insurance is a type of professional liability insurance that provides a safety net for corporate risks. This study, using data from Shanghai and Shenzhen A-share listed companies from 2010 to 2020, examines the impact of D&O Liability Insurance on corporate strategic deviation from the perspective of corporate risk-taking, providing evidence for corporate strategic decision-making and governance. Empirical research finds that the purchase of D&O Liability Insurance directly leads to an increase in strategic deviation. Furthermore, the act of purchasing D&O Liability Insurance significantly enhances the company's capability to take risks, thereby further increasing the degree of strategic deviation. This conclusion holds even after controlling for potential endogeneity issues and changing the measurement methods of core variables. Further analysis reveals that D&O liability insurance has a more significantly positive effect on the strategic deviation of non-state-owned enterprises and larger-sized companies. Compared to before purchasing the insurance, companies have significantly improved their risk-taking ability and strategic deviation after purchasing the insurance.
Authors and Affiliations
Haiping Wang, Yifan Xian, Yi Liu, Ibrahim Badi
Keywords
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- EP ID EP732681
- DOI https://doi.org/10.56578/jote010205
- Views 54
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