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| Litigation Risk and Directors’ & Officers’ Liability Insurance——Based on the Empirical Evidence of Chinese A-share Listed Companies |
| LIU Xiangqiang1,ZHAO Yang2,SUN Jian3 |
1. College of Economics and Management, Southwest University
2. Management School, Jinan University
3. School of Accountancy, Central University of Finance and Economics
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Abstract Choosing the Chinese A-share listed companies from 2009 to 2014 as the research sample, we analyzes the impact of the litigation risk on the directors’ and officers’ liability insurance (D&O insurance), and further analysis combined with China’s special institutional background. The results show that there is a significant positive correlation between the litigation risk and the purchasing decision of the D&O insurance. That is, the higher the risk of litigation, the stronger the motivation of the enterprise to buy the D&O insurance. Further study finds that the legal environment and political relevance play a regulatory role. Better legal environment enhances the relationship between litigation risk and D&O insurance, and the existence of political association weakens the relationship above. The research of this paper enriches the theory of the demand motivation of the D&O insurance, and to some extent, it explains the reason why the enthusiasm of the D&O insurance is not high in our country. The conclusion of the study provides some suggestions and policy reference for the development of D&O insurance in China.
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Received: 03 May 2017
Published: 15 September 2017
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Corresponding Authors:
SUN Jian
E-mail: sunjian@cufe.edu.cn
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Griffith S J. Uncovering a Gatekeeper: Why the SEC Should Mandate Disclosure of Details concerning Directors' and Officers' Liability Insurance Policies[J]. University of Pennsylvania Law Review, 2006, 154(5):1147-1208.
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2017, Vol. 37 
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