Directors and Officers Liability Insurance and High-Quality Development of Enterprises: From the Perspective of Agency Cost and Innovation Incentive

ZHANG Zenglian, XU Fangyuan

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PDF(1189 KB)
Front. Bus. Res. China ›› 2022, Vol. 16 ›› Issue (4) : 394-411. DOI: 10.3868/s070-007-022-0021-9
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Directors and Officers Liability Insurance and High-Quality Development of Enterprises: From the Perspective of Agency Cost and Innovation Incentive

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Abstract

High-quality economic development can be achieved if a major strategic direction for China are delivered from the macro level to the micro level. Taking A-listed enterprises in China from 2005 to 2018 as samples, this paper studies the impact of directors and officers liability insurance (D&O insurance) on the highquality enterprise development. The research results show that D&O insurance can promote high-quality development. In addition, the mechanism test shows that D&O insurance can reduce agency costs and improve innovations and high-quality enterprise development. Further analysis shows that when stateowned enterprises including their internal controls has no major defects, D&O insurance has more significant positive impact. Thus, this paper suggests that the insurance should be promoted for realizing high-quality enterprise development.

Keywords

directors and officers liability insurance (D&O insurance), highquality enterprise development, agency cost, innovative behavior

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ZHANG Zenglian, XU Fangyuan. Directors and Officers Liability Insurance and High-Quality Development of Enterprises: From the Perspective of Agency Cost and Innovation Incentive. Front. Bus. Res. China, 2022, 16(4): 394‒411 https://doi.org/10.3868/s070-007-022-0021-9

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