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THE MULTIFACETED IMPACT OF DIRECTORS AND OFFICERS (D&O) INSURANCE ON CORPORATE GOVERNANCE AND PERFORMANCE.
- Source :
- Asian Academy of Management Journal of Accounting & Finance; 2024, Vol. 20 Issue 1, p1-39, 39p
- Publication Year :
- 2024
-
Abstract
- In the ever-evolving capital market, safeguarding shareholder rights and interests is paramount for Chinese listed companies facing escalating risks. This article explores the dynamic discourse surrounding Directors and Officers (D&O) insurance, focusing on its implications in emerging markets with lower institutional support and disclosure quality. Spanning 2000 to 2020, this study rigorously examines the impact of D&O insurance in China, investigating its associations with capital markets, regulatory frameworks, managerial practices and financial reporting. My analysis reveals that D&O insurance correlates negatively with CEO turnover and litigation risk. However, its influence on investment efficiency, earnings management, financial reporting and corporate governance is comparatively modest. I also uncover nuanced disparities between state-owned enterprises (SOEs) and non-state-owned enterprises (non-SOEs). In SOEs, where CEOs are appointed by the government and litigation risk is lower, D&O insurance’s impact is less pronounced. Conversely, non-SOEs, facing higher litigation risk, find greater significance in D&O insurance as protection against legal action. In summary, this article highlights D&O insurance’s role as a protective shield for CEOs and underscores its evolving dynamics in Chinese listed companies’ corporate governance and risk management. [ABSTRACT FROM AUTHOR]
Details
- Language :
- English
- ISSN :
- 18234992
- Volume :
- 20
- Issue :
- 1
- Database :
- Complementary Index
- Journal :
- Asian Academy of Management Journal of Accounting & Finance
- Publication Type :
- Academic Journal
- Accession number :
- 179003734
- Full Text :
- https://doi.org/10.21315/aamjaf2024.20.1.1