Directors’ and Officers’ Liability Insurance and Cost Stickiness: Evidence from the Financial Industry in Taiwan

• Main Author: 林佳蓉
• Other Authors: 黃劭彥
• Format: Others
• Language: zh-TW
• Published: 2016
• Online Access: http://ndltd.ncl.edu.tw/handle/we4566

碩士 === 國立中正大學 === 會計與資訊科技研究所 === 104 === In 2003, Anderson et al. (2003) investigated the cost of sticky, whether cost decrease when activity falls smaller than they increase when activity rises by an equivalent amount. And in 2008, firms disclose mandatorily the status about D&O insurance. In this paper, we examining whether the Directors' and Officers' Liability Insurance (D&O insurance) makes degree of sticky smaller using data from Taiwan financial industry between 2008 and 2014. We find that, (a) in finance industry, personnel expenses and non-personnel expenses are sticky when firms’ operating revenue decrease. (b) Due to insurance company’s supervision mechanism, firms that insured D&O insurance reduce agency problem and cost stickiness does not exist. Cost stickiness exists in financial industry by agency problem, adjustment costs such as disposal cost, severance pay. When firms insured D&O insurance, insurance company supervise operation and finance of firms to reduce agency problem and cost stickiness does not exist.