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Peer Effects in Directors’ and Officers’ Liability Insurance: Evidence from China

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  • Hu, Yuanyuan
  • Fang, Jiali

Abstract

This study finds the purchase of liability insurance for a firm's directors and officers (D&Os) is positively influenced by whether its peer firm purchases such insurance. Firms are considered to be peers if their executives are university alumni. Despite the fact that China has the second largest insurance industry in the world, D&O insurance coverage in Chinese listed firms is relatively low. Our study hence suggests an important new determinant of D&O insurance purchases in China (i.e., executive social ties).

Suggested Citation

  • Hu, Yuanyuan & Fang, Jiali, 2022. "Peer Effects in Directors’ and Officers’ Liability Insurance: Evidence from China," Finance Research Letters, Elsevier, vol. 47(PB).
    • Handle: RePEc:eee:finlet:v:47:y:2022:i:pb:s154461232200054x
    DOI: 10.1016/j.frl.2022.102731
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    References listed on IDEAS

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    Cited by:

    1. Wang, Man & Sun, Lujia, 2023. "Does Directors’ and Officers’ Liability Insurance improve corporate governance of Chinese listed firms? The moderating role of insider ownership," Finance Research Letters, Elsevier, vol. 51(C).
    2. He, Hui & Shi, Wei, 2023. "Enterprise litigation risk and enterprise performance," Finance Research Letters, Elsevier, vol. 55(PA).

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    More about this item

    Keywords

    alumni effect; peer influence; D&O insurance; social connection; China;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • M20 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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