| Summary: | 博士 === 逢甲大學 === 商學研究所 === 100 === This paper uses corporate governance characteristics as well as auditor traits to analyze the impact of the purchase of directors’ and officers’ liability insurance (D&O insurance). The results indicate that corporate governance affects the demand for D&O insurance; in particular, the pledged shares and insufficient shareholdings of directors and supervisors are significantly positively correlated to insurance demand and negative audit opinions. Companies without insurance have better corporate governance mechanisms compared to those with insurance. Although the corporate governance of companies with insurance is comparatively weaker, these companies compensate for the inadequacy of their governance mechanisms by inviting industrial specialists and Big 4 firms. The empirical results suggest that D&O insurance can strengthen external governance. Meanwhile, auditors will provide better evaluations of the financial statements prepared by companies with D&O insurance. In other words, D&O insurance has supervision effects on management and substitute effects on industrial experts.
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