Directors’ and Officers’ Liability Insurance and Acquisition Performance: Evidence from Publicly Traded Firms in Taiwan

• Main Authors: Wu, Han-Ching, 鄔函靜
• Other Authors: Jeng, Shih-Ching
• Format: Others
• Language: en_US
• Published: 2019
• Online Access: http://ndltd.ncl.edu.tw/handle/6khzhm

碩士 === 國立政治大學 === 風險管理與保險學系 === 107 === We link the idea of directors’ and officers’ liability insurance (D&O insurance) with mergers and acquisitions (M&As) and examine how the purchase of directors’ and officers’ liability insurance may affect acquisition performance of firms in Taiwan. Using publicly-traded firms data in Taiwan from 2009 to 2016, we investigate both short-term and long-term buy and hold returns as well as announcement-period stock returns. We find that acquirers whose managers are protected by D&O insurance or carry higher policy limits experience higher announcement abnormal stock returns than do acquirers without D&O insurance or lower policy limits. We also find that acquirers with D&O insurance or higher coverage experience higher one-year buy and hold abnormal returns but lower three-year buy and hold abnormal returns. Our results show that examining long-term performance of the firm, specifically three-year performance, provides different perspectives to the current D&O insurance literatures.