New Psychology Research Reported from Sichuan International Studies University (The impact of subscribing to directors’ and officers’ liability insurance on corporate financialization: Evidence from China): Psychology

Psychology & Psychiatry Daily

2022 OCT 05 (NewsRx) -- By a News Reporter-Staff News Editor at Psychology & Psychiatry Daily -- Data detailed on psychology have been presented. According to news reporting originating from Chongqing, People’s Republic of China, by NewsRx correspondents, research stated, “As an important corporate governance mechanism, directors’ and officers’ liability insurance is theoretically associated with corporate financialization because it directly affects incentive constraints and risk preference of enterprise managers.”

The news reporters obtained a quote from the research from Sichuan International Studies University: “However, whether there is a causal relationship in fact has not been sufficiently empirically investigated. Using a sample of Chinese non-financial listed companies in Shanghai and Shenzhen A-shares from 2008 to 2020, this paper empirically analyzes how corporate subscription to directors’ and officers’ liability (D&O) insurance affects corporate financialization and examines the mediating role played by risk-taking, financing constraints, and audit quality. The study finds that corporate subscription to D&O insurance increases corporate financialization. In terms of the influential mechanism, subscription to D&O insurance promotes financialization by increasing risk-taking, alleviating financing constraints, and improving audit quality.”

According to the news editors, the research concluded: “In addition, the results in the heterogeneity analysis suggest that the promotion of financialization by subscribing to D&O insurance is more significant in state-owned enterprises, growth and decline stage enterprises, and non-dual-employment enterprises.”

For more information on this research see: The impact of subscribing to directors’ and officers’ liability insurance on corporate financialization: Evidence from China. Frontiers in Psychology, 2022,13. (Frontiers in Psychology - http://frontiersin.org/psychology). The publisher for Frontiers in Psychology is Frontiers Media S.A.

A free version of this journal article is available at https://doi.org/10.3389/fpsyg.2022.986135.

Our news journalists report that more information may be obtained by contacting Cheng Peng, Center for International Business and Economy, School of International Finance and Trade, Sichuan International Studies University, Chongqing, People’s Republic of China. Additional authors for this research include Wenting Fu, Xinyu Zhang, Hui Jiang.