The impact of directors’ and officers’ liability insurance on firm’s investment efficiency: evidence from China

IF 2.1 Q2 BUSINESS, FINANCE
Weiping Li, Huirong Li, Xuan (Sean) Sun, Tairan Huang
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引用次数: 0

Abstract

Purpose The purpose of this paper is to examine the impact of directors’ and officers’ liability insurance (D&O insurance hereafter) on corporate governance and firm performance, with a specific focus on investment efficiency. Design/methodology/approach Using a sample of Chinese A-share listed firms from the period 2007 to 2020, this study uses Ordinary Least Squares regressions to investigate the research questions, as well as moderating and mediating effects. Additionally, alternative measures of investment efficiency are used, and the Heckman two-stage model and propensity score matching model are used to demonstrate the consistency of the findings and to mitigate the risk of endogeneity. Findings The findings of this study suggest that purchasing D&O insurance has a detrimental impact on corporate investment efficiency, particularly in the context of over-investment activities; robust internal governance mechanisms, exemplified by a higher shareholding ratio of the top shareholder and enhanced internal control quality, alleviate this negative effect; and financing constraints act as a mediating factor in the association between D&O insurance and investment efficiency. Originality/value Corporate investment efficiency is of significant importance for both national macroeconomic growth and micro-enterprise development. Notably, the prevalence of D&O insurance among Chinese firms is progressively increasing, thus exerting a growing influence. This study contributes to the existing literature on D&O insurance and corporate investment efficiency, providing valuable insights into the economic impact of D&O insurance on Chinese firms. The empirical evidence presented herein facilitates future reforms and adjustments.
董事和管理人员责任保险对企业投资效率的影响:来自中国的证据
目的本文旨在考察董事和高级管理人员责任保险(以下简称D&O保险)对公司治理和公司绩效的影响,特别关注投资效率。设计/方法/方法本研究以2007年至2020年中国a股上市公司为样本,采用普通最小二乘回归方法对研究问题以及调节和中介效应进行了研究。此外,还使用了投资效率的替代衡量标准,并使用Heckman两阶段模型和倾向得分匹配模型来证明研究结果的一致性,并降低内生性风险。研究结果本研究的结果表明,购买D&O保险对企业投资效率有不利影响,尤其是在过度投资活动的情况下;健全的内部治理机制,如大股东持股比例的提高和内部控制质量的提高,缓解了这种负面影响;融资约束是D&O保险与投资效率之间关系的中介因素。创新性/价值企业投资效率对国家宏观经济增长和微型企业发展都具有重要意义。值得注意的是,D&O保险在中国企业中的普及率正在逐步提高,从而发挥着越来越大的影响力。本研究有助于现有关于D&O保险和企业投资效率的文献,为了解D&O保险对中国企业的经济影响提供了有价值的见解。本文提供的经验证据有助于未来的改革和调整。
本文章由计算机程序翻译,如有差异,请以英文原文为准。
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来源期刊
Pacific Accounting Review
Pacific Accounting Review BUSINESS, FINANCE-
CiteScore
3.80
自引率
9.50%
发文量
36
期刊介绍: Pacific Accounting Review is a quarterly journal publishing original research papers and book reviews. The journal is supported by all New Zealand Universities and has the backing of academics from many universities in the Pacific region. The journal publishes papers from both empirical and theoretical forms of research into current developments in accounting and finance and provides insight into how present practice is shaped and formed. Specific areas include but are not limited to: - Emerging Markets and Economies - Political/Social contexts - Financial Reporting - Auditing and Governance - Management Accounting.
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