Dose The Purchasing Of Directors’ And Officers’ Liability Insurance Enhance Or Mitigate A Firm’s Overinvestment

• Main Authors: Lin, Pinshiuan, 林品萱
• Other Authors: Chen, Chiawei
• Format: Others
• Language: en_US
• Published: 2012
• Online Access: http://ndltd.ncl.edu.tw/handle/14202687970524969810

碩士 === 東海大學 === 財務金融學系 === 100 === Since financial crisis has become a critical issue,no matter government or firms and even investors should be pay more attention on managerial behavior.Therefore,directors and officers should be liable for the corporation misconducts.Directors’and officers’liability insurance is designed to protect directors and shareholder wealth. With publicly available and relatively complete dataset of listed firms in Taiwan in which the information of directors’liability insurance is disclosed since 2008,in this paper,we attempt to revisit the role ofdirectors’ and officers’ liability insurance through a topic that has not been explored.In particular,we suspect the firms’investment decision-making process could be differential in firms with and without the adoption of this insurance.We examine the effect of directors’and officers’liability insurance on firms’ overinvestment decision.The empirical evidence indicates that firms have adoption of directors’and officers’liability insurance experience significantly lower the firms’overinvestment.Therefore,this paper could provide new evidence to appreciate the adoption of the directors’ and officers’ liability insurance and help to evaluate the policy of mandatorily disclose the information of directors’ liability insurance as well.