Do directors with foreign experience increase the corporate demand for directors? and officers? liability insurance? Evidence from China

Do directors with foreign experience increase the corporate demand for directors' and officers' liability (D&O) insurance? Previous studies have documented the impacts of firms having D&O insurance on corporate practices. However, it is unclear how a firm's decision to acquire D&O insurance is made in an emerging market. Using a sample of Chinese firms from 2008 to 2018, we examine the impact of having overseas returnee directors (ORDs) on a firm's demand for D&O insurance. Our findings suggest that firms with ORDs are likely to have such in-surance. Further analyses suggest that the association is more pronounced for firms with a high level of inter-nationalization or located in high marketization regions (i.e., locations with a well-functioning market system). Hence, a firm's internationalization and its location's marketization are the mechanisms for the impact. Our results advance the literature on the effect of personnel internationalization on the demand for D&O insurance.