Reports Outline Insurance Study Findings from Beijing Union University (Directors’ and Officers’ Liability Insurance and Corporate Cash Holdings: From Principal-principal Perspective): Insurance

NewsRx Policy and Law Daily

2023 NOV 03 (NewsRx) -- By a News Reporter-Staff News Editor at NewsRx Policy and Law Daily -- Investigators publish new report on Insurance. According to news reporting out of Beijing, People’s Republic of China, by NewsRx editors, research stated, “This study examines the effect of directors’ and officers’ liability insurance (D&O insurance) on corporate cash holdings in China. We propose a collusion theory in which D&O insurance can exacerbate the conflicts of interest between controlling and minority shareholders by shielding directors and officers from shareholder litigation in emerging countries.”

Funders for this research include This work was supported by the National Natural Science Foundation of China (grant number 72372038), the Natural Science Foundation of Guangxi Province (grant number 2023GXNSFAA026151), the Key Research Base of Humanities and Social Sciences in Guangxi Uni, National Natural Science Foundation of China (NSFC), National Natural Science Foundation of Guangxi Province, Key Research Base of Humanities and Social Sciences in Guangxi Universities, Bagui Scholars Program of Guangxi Zhuang Autonomous Region “China-ASEAN Big Data Research.

Our news journalists obtained a quote from the research from Beijing Union University, “Consistent with our expectation, we find that insured firms tend to have high cash holdings that are appropriated by both controlling shareholders and directors/officers rather than being invested or paid to shareholders. Moreover, the positive relationship between D&O insurance and cash holdings is more pronounced in firms with high litigation risks, whereas the effect is attenuated in firms with political connections, strong external monitoring mechanisms and strong controlling shareholder power.”

According to the news editors, the research concluded: “Compared with uninsured firms, the market discounts the value of cash holdings for insured firms.”

This research has been peer-reviewed.

For more information on this research see: Directors’ and Officers’ Liability Insurance and Corporate Cash Holdings: From Principal-principal Perspective. Journal of Business Finance &amp Accounting, 2023. Journal of Business Finance &amp Accounting can be contacted at: Wiley, 111 River St, Hoboken 07030-5774, NJ, USA.

Our news journalists report that additional information may be obtained by contacting Lijuan Yan, Beijing Union University, Management Coll, Beijing, People’s Republic of China. Additional authors for this research include Quanxi Liang and Wenlian Gao.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1111/jbfa.12752. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

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