Directors’ and officers’ liability insurance and corporate cash holdings: From principal–principal perspective

IF 2.2 3区管理学 Q2 BUSINESS, FINANCE Journal of Business Finance & Accounting Pub Date : 2023-09-24 DOI:10.1111/jbfa.12752

Quanxi Liang, Wenlian Gao, Lijuan Yan

引用次数: 0

Abstract

This study examines the effect of directors’ and officers’ liability insurance (D&O insurance) on corporate cash holdings in China. We propose a collusion theory in which D&O insurance can exacerbate the conflicts of interest between controlling and minority shareholders by shielding directors and officers from shareholder litigation in emerging countries. Consistent with our expectation, we find that insured firms tend to have high cash holdings that are appropriated by both controlling shareholders and directors/officers rather than being invested or paid to shareholders. Moreover, the positive relationship between D&O insurance and cash holdings is more pronounced in firms with high litigation risks, whereas the effect is attenuated in firms with political connections, strong external monitoring mechanisms and strong controlling shareholder power. Compared with uninsured firms, the market discounts the value of cash holdings for insured firms.

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董事和高级职员责任保险与公司现金持有量：从委托人-委托人的角度

本研究探讨了董事及高管责任保险（D&O 保险）对中国企业现金持有量的影响。我们提出了一种合谋理论，即在新兴国家，董事及高管责任险可以通过保护董事和高管免受股东诉讼而加剧控股股东和小股东之间的利益冲突。与我们的预期一致，我们发现投保企业往往持有大量现金，这些现金被控股股东和董事/高管挪用，而不是用于投资或支付给股东。此外，在诉讼风险较高的公司中，D&O 保险与现金持有量之间的正相关关系更为明显，而在拥有政治关系、强大的外部监督机制和强大的控股股东权力的公司中，这种影响则有所减弱。与未投保的公司相比，市场会对投保公司的现金持有价值打折扣。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Journal of Business Finance & Accounting BUSINESS, FINANCE-

CiteScore

4.40

自引率

17.20%

发文量

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