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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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    4. 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).
    5. Yang, Runze & Wu, Junwei & Yang, Cunyi & Albitar, Khaldoon, 2024. "Far-sighted through mitigating risk: Directors and officers liability insurance and corporate ESG performance," International Review of Financial Analysis, Elsevier, vol. 96(PB).
    6. Manuel Verdú Henares & Óscar Carchano Alcina & Federico Platania, 2026. "On abnormal returns in events associated with equity offerings," Estudios de Economia, University of Chile, Department of Economics, vol. 53(1), pages 4-29, June.
    7. Li, Yunhe & Liu, Yu & Miletkov, Mihail & Yang, Tina, 2025. "Creating value through corporate social responsibility: The role of foreign institutional investors in Chinese listed firms," Journal of Empirical Finance, Elsevier, vol. 82(C).
    8. He, Hui & Shi, Wei, 2023. "Enterprise litigation risk and enterprise performance," Finance Research Letters, Elsevier, vol. 55(PA).
    9. Li, Houjian & Cheng, Quanfeixue & Su, Mengying & Zhang, Kuan, 2025. "Empowering ESG: The pivotal influence of directors' and officers' liability insurance on corporate sustainability," International Review of Economics & Finance, Elsevier, vol. 101(C).
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    11. Vu Quang Trinh & Teng Li & Oanh Ha & Jia Liu, 2025. "Board busyness and financial leverage: The impact of corporate tax avoidance," The Financial Review, Eastern Finance Association, vol. 60(3), pages 951-1002, August.
    12. Huang, Xin & Wu, Ji (George) & Bai, Hengyu & Yu, Hanze & Li, Jing, 2025. "Care or fear? The link between D&O liability insurance and CSR engagement: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 92(C).
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    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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