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

ZHANG Zenglian; XU Fangyuan

doi:10.3868/s070-007-022-0021-9

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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

ZHANG Zenglian¹ ,
XU Fangyuan²

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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