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The role of information: When is Directors' and Officers' insurance value-added?
被引：11
|作者：
Chang, Shih-Chung
[1
]
Ren, Yayuan
[2
]
Yeh, Jason
[3
]
机构：
[1] Takming Univ Sci & Technol, Dept Insurance & Financial Management, Taipei, Taiwan
[2] Illinois State Univ, Dept Finance Insurance & Law, Normal, IL 61761 USA
[3] Chinese Univ Hong Kong, Dept Finance, Hong Kong, Peoples R China
关键词：
Directors and Officers insurance;
Information quality;
Corporate governance;
CORPORATE GOVERNANCE RISK;
LIABILITY INSURANCE;
BOARD INDEPENDENCE;
COMPENSATION;
MONITOR;
DEMAND;
D O I：
10.1016/j.jbankfin.2018.10.003
中图分类号：
F8 [财政、金融];
学科分类号：
0202 ;
摘要：
The paper presents a model of shareholders' decisions to purchase Directors' and Officers' liability insurance (D&O insurance) for their directors. We consider the tradeoff between the governance enhancing effect and the moral hazard effect of D&O insurance and focus on the role of information in determining the optimal level of D&O insurance purchase. The model shows that when directors are well informed, the governance enhancing effect of D&O insurance dominates the moral hazard effect, and thus, D&O insurance adds value to the firm. When directors are under-informed, the best strategy for shareholders is not to provide D&O insurance for directors. The model further shows that the optimal level of D&O insurance, when it exists, increases in the quality of the information received by directors. These results imply cross-firm variations in D&O insurance purchase. Published by Elsevier B.V.
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页码：189 / 197
页数：9
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